Definitive exiting from Brazil: how to avoid problems with RFB

Brazilians who are going to permanently exit or have already exit Brazil should be aware of their obligations to inform about the definitive departure to the Federal Revenue.

Usually, when starting the research on the subject, this taxpayer already faces two processes that are common to raise doubts: the Definitive Country Exiting Communication (CSDP) and the Definitive Country Exiting Statement (DSDP).

It is important to be informed about these obligations and to be prepared to report them timely and accurately to avoid problems with the Federal Revenue.

Non-resident status

Firstly, it is worth mentioning the cases applicable to Brazilians under non-residency condition.

Individuals considered as non-resident in Brazil are:

• who permanently no longer lives in Brazil;
• who permanently leaves the national territory, at the exit date, or after twelve consecutive months of absence, in the case of not having reported the Definitive Country Exiting Communication.
• who is temporarily absent from Brazil, from the day following that on which completes twelve consecutive months of absence.

The taxpayer, even if remains considering the temporary absence and intends to re-establish itself in Brazil, must carry out the procedures provided for by tax law.

1. Definitive Country Exiting Communication

Requirement

The taxpayer who permanently leaves Brazil or who becomes a non- resident in Brazil (when has initially left on a temporary basis) must report it.

Deadlines

This is a formal communication to the RFB that must be sent between the exit date and the last day of February in the following calendar year, when the taxpayer permanently exit.

When the exit has a temporary objective, but the permanence abroad leads the taxpayer to be characterized as non-resident in Brazil, the term becomes valid from the date of characterization of the non-resident condition until the last day of February of the following calendar year.

For example, those who have temporarily left Brazil with no intention to permanently move to another country, but have remained abroad, from the day following the completion of twelve consecutive months of absence, will become a non-resident. Such taxpayer goes into the mandatory range of CSDP's reporting.

One thing to consider is that it is not possible to report this type of declaration after the deadline. This is because the RFB makes the electronic form available only during the current filing period.

Thus, those who left the country in 2020, must send the CSDP by February 28, 2021, when the CSDP calendar year 2020 form will no longer be available on the Revenue website.

However, whoever failed to meet the deadline to report the CSDP does not lose the right to report a Definitive Country Exiting Statement. Although the CSDP is part of the tax residency closing process, no legal provision for penalty due to failure to file the document and DSDP remains the formal document for closing tax residence.

Other requirements

As the RFB highlights, the reporting of the CSDP does not release from reporting the Definitive Country Exiting Statement, the reports corresponding to the previous calendar years (if required and not yet reported), and the payment of the tax calculated therein and of the others tax credits not yet paid.

Correction

If, after reporting the CSDP, the taxpayer finds that made mistakes or omitted information must file the rectification, but as long as it is within the period in which the CSDP remains available on the RFB website.

2. Definitive Country Exiting Statement

More than to simply communicating the exit, the Definitive Country Exiting Statement aims to determine the tax due or to refund in relation to the period in which the person maintained his residence in Brazil in the calendar year prior the reporting the statement. DSDP can be said that is a “form of income tax report”.

Requirement

Individuals residing in Brazil who have become non-residents, in addition to the CSDP, must present the Definitive Country Exiting Statement. In other words, those who have permanently moved abroad or have been away for more than twelve months are required.

Deadline

The taxpayer under this obligation must report the Definitive Country Exiting Statement Definitive Country Exiting Statement Definitive Country Exiting Statement from the first business day of March until the last business day of April of the calendar year following the departure, if permanently, or from the date of non-resident departure characterization status, if the departure is temporary.

This is the usual term, which usually accompanies the final deadline to file the Individual Income Tax Report (DIRPF). However, in 2020, for example, this deadline was changed due to the coronavirus pandemic. Taxpayers had until June 30 to file these statements.

Penalties

The taxpayer, if missed the deadline, is exposed to a 1% penalty per month, or fraction of a month of overdue payment, calculated on the amount of tax due, observing the minimum amount of BRL 165.74 and maximum of 20% of tax due. If there is no tax payable, the penalty is set at BRL 165.74.

The penalty is applied if no statement is filed during the established period. If it was transmitted within the deadline, but a correction is required, the penalty is not applied.

Correction

If the taxpayer, after filing the DSDP, finds any mistakes or omitted information, a correction must be submitted.

Support to individuals for the definitive exiting

Brazilians who wish or already lives overseas, but intend to settle their situation with the tax entity, can rely on Domingues e Pinho Contadores’ specialized guidance.

The DPC’s Individuals team is prepared to assist taxpayers in such situations, coordinating the actions related to the definitive exiting due to the Federal Revenue, with any requirements for reporting to the Central Bank.