How can Brazilians abroad maintain tax regularity?

Those leaving Brazil should be aware of the necessary steps to ensure tax compliance

International mobility brings tax obligations for Brazilians who move abroad. In this case, planning is essential to avoid registration issues, incorrect taxation, double taxation, and impacts on companies and financial transactions.

Below, learn about the main precautions regarding the status of Brazilian expatriates.

Brazilians abroad: Pay attention to Tax Departure

Brazilians who leave the country must inform the Brazilian Federal Revenue Service that they are no longer tax residents in Brazil. Without this formalization, they may remain required to report income received anywhere in the world.

It is worth noting that non-tax residence occurs when the departure is permanent or when an initially temporary absence exceeds 12 consecutive months.

The definitive departure procedure from the country involves two obligations:

1. Definitive Country Exiting Communication (CSDP): must be submitted by the last day of February of the year following the departure, and
2. Definitive Country Exiting Statement (DSDP): must be submitted by the last business day of May of the year following the departure.

After the formalization, the taxpayer is no longer required to report in Brazil the income earned abroad.

However, they remain subject to taxation on Brazilian-source income, when applicable, according to the rules applicable to non-residents.

Also see: Q&A about declaring definitive departure from Brazil

I missed the deadline to report my departure from the country. Can I still regularize my situation?

Many taxpayers only realize years after leaving Brazil that they should have formalized their tax departure. When the departure occurred less than five years ago, it may still be possible to regularize the situation, depending on the following circumstances.

In these cases, the CSDP usually can no longer be submitted. However, provided that no tax returns incompatible with non-resident status have been filed, it is generally possible to submit the DSDP late.

However, it is important to note that late filing is subject to a fine corresponding to the higher of BRL 165.74 or 1% per calendar month (or fraction thereof) on the tax due, limited to 20% of the tax due calculated before offsetting the tax already paid during the year.

In addition, depending on the situation, it may also be necessary to regularize tax returns related to previous years.

Tax departure more than five years ago

If more than five years have passed since the tax departure without the required obligations being filed, the situation changes due to the statute of limitations. Under these conditions, it is no longer possible to submit the CSDP or the DSDP.

Even so, it may be necessary to update or regularize the CPF status before the Brazilian Federal Revenue Service.

Other precautions for those living outside Brazil

Non-resident status must be reported to Brazilian paying sources, such as employers, banks, brokerage firms, and others. This allows taxes to be withheld in accordance with the rules applicable to non-residents.

It is also necessary to assess any business activities maintained in the country. Those who become non-residents cannot open or remain registered as an Individual Microentrepreneur (MEI). Companies with non-resident partners or managers may also face restrictions under Simples Nacional.

Before formalization, it is advisable to analyze income, investments, assets, inheritances, donations, equity interests, pending tax returns, CPF (Individual Tax Registration) status, and possible international agreements to avoid double taxation.

See more: How to avoid costs and risks when employing expatriates

Planning reduces risks

In summary, Brazilians living abroad should pay attention to tax planning and compliance.

In other words, it is important to correctly define the following situations:

• the non-residence date;
• compliance with tax departure obligations;
• notifying banks and other paying sources;
• assessing CPF status, investments, and companies;
• checking agreements to avoid double taxation.

DPC as strategic support

A successful expatriation begins with structured and secure planning.

Compliance with the applicable legislation is essential to protect the individual, creating the conditions for international mobility to be carried out efficiently.

For support throughout all stages of this process, count on DPC Private.

Contact us by email at: dpc@dpc.com.br.