Taxes in Brazil: Which should I pay?

If you’re thinking of moving to Brazil or setting up your business in the samba country, you should be aware of the taxes you need to pay. To start, we warn you that taxes in Brazil are some of the most complex in Latin America, so it’s a good idea to read this information before becoming a taxpayer.

Luckily, at Holafly, you’ll find the guidance you need regarding taxes in Brazil. In this post, we will dive into the tax system of this country, the types of taxes you must pay as an individual or a legal entity, the current rates, and the benefits.

How do taxes work in Brazil?

Brazil’s tax system is complex and is based on tax collection at three levels of government: Federal, state, and municipal. This structure funds a variety of public services, such as healthcare, education, and infrastructure. The system taxes both individuals and legal entities, with different types of taxes depending on the level of government.

1. Federal Taxes: Managed by the Receita Federal (Federal Revenue Service), which is responsible for regulating and overseeing tax collection at the national level. This includes taxes on income, goods production, and certain types of income and sales.
2. State Taxes: Each state in Brazil has the authority to establish its own taxes, mainly the ICMS (on goods and certain services) and the IPVA (on vehicles). These taxes are managed by the State Finance Secretariats.
3. Municipal Taxes: Municipalities also impose certain taxes, such as the IPTU (on real estate property) and the ISS (on services). They are managed by the Municipal Finance Secretariats.

Tax Filing in Brazil

In Brazil, taxes are paid at different intervals depending on the type and level of taxation. The Individual Income Tax (IRPF) is paid annually, usually between March and April of the following year. Companies must pay the Corporate Income Tax (IRPJ) annually, with the deadline by the last day of March. The PIS and COFINS taxes are declared and paid monthly, depending on the applicable tax regime (cumulative or non-cumulative). Additionally, state taxes such as ICMS and other municipal taxes have payment deadlines that may be monthly or quarterly, depending on local regulations.

Taxes in Brazil for individuals

If you’re a freelancer, digital nomad, or self-employed and live in Brazil or plan to do so for a while and file taxes, don’t let the complexity of taxes and the multiple rates of this system be an obstacle. In this section, we’ll cover the taxes that an individual resident in Brazil is subject to, explained in the simplest way possible with some examples for clarity.

1. Personal Income Tax (IRPF)

The IRPF is a federal tax on the income of individuals from salaries, rents, and other sources of income. Its purpose is to raise funds for public services and government programs.

Individuals residing in Brazil are required to file and pay the IRPF if they:

• In the previous fiscal year, their taxable income exceeded $6,400 (€5,900).
• Exempt income, non-taxable income, or income subject to exclusive withholding tax exceeds $38,400 (€35,300) (including income such as indemnities, inheritances, and others).
• If they made gains from the sale of assets or rights subject to taxation.
• Engaged in operations in the securities market.
• Own assets and rights, including land, with a total value exceeding $152,000 (€139,000).
• Earned more than $32,000 (€29,500) in gross annual income from rural activities.

• In the previous fiscal year, their taxable income exceeded $6,431 (€5,762).
• Exempt income, non-taxable income, or income subject to exclusive withholding tax exceeds $38,000.00 (€34,000) (including income such as indemnities, inheritances, and others).
• If they made gains from the sale of assets or rights subject to taxation.
• Engaged in operations in the securities market.
• Own assets and rights, including land, with a total value exceeding $152,000 (€136,000).
• Earned more than $32,202 (€28,805) in gross annual income from rural activities.

Rates for 2025:

• Up to $5,150 (€4,608): Exempt
• From $5,151 to $6,451 (€4,992 to €5,877): 7.5%
• From $6,452 to $8,551 (€5,924 to €7,652): 15%
• From $8,552 to $10,588 (€7,886 to €9,517): 22.5%
• More than $10,588 (€9,517): 27.5%

For example, with an annual income of $9,500 (€8,150):

• Exempt part: $5,150 (€4,608)
• Taxable part: $4,350 (€3,662)
• Estimated tax applying progressive rates: Around $695 (€593)

2. Contribution to the National Institute of Social Security (INSS)

The INSS in Brazil is a mandatory contribution made by workers and employers to the country’s social security system. INSS contributions fund Brazil’s social security system, ensuring that workers have access to various benefits, such as:

• Retirement: Provides income during old age.
• Death pension: Financially supports dependents in case of the insured’s death.
• Maternity leave.
• Sickness allowance: Financial assistance in case of temporary incapacity due to health reasons.

Who must contribute to the INSS?

• Wage earners: Employees with formal contracts must contribute to the INSS, with the corresponding deductions made directly from their salaries.
• Self-employed workers and employers: They are also required to contribute to the INSS, being responsible for making their contributions independently.

Rates for 2025:

• Up to $288 (€258): 7.5%
• From $288.42 to $531 (€259 to €453): 9%
• From $532 to $796 (€453 to €672): 12%
• From $797 to $1,552 (€672 to €1,323): 14%

3. Vehicle Property Tax (IPVA)

The IPVA is an annual tax that vehicle owners, including cars, motorcycles, trucks, and buses in Brazil, must pay. This tax is administered by state governments. Boats and aircraft are not subject to this tax.

How is the IPVA calculated?

The IPVA value is determined by applying a specific rate to the vehicle’s market value, which is the estimated market price for that model and year. The rates vary by state and vehicle type. For example, in São Paulo, the rate for private cars is 4%.

For example, if a car has a market value of $5,700 (€5,100) and the rate in its state is 4%, the calculation would be:

•  IPVA: $5,700 (€5,100) × 4% =  $228 (€204) .

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4. Urban Property Tax (IPTU)

The IPTU is a municipal tax that applies to the ownership of urban real estate properties. It is used to fund municipal services such as urban cleaning and infrastructure maintenance.

Who must pay the IPTU?

While the primary responsibility lies with the property owner, it is common for rental contracts to stipulate that the tenant will bear the cost of the tax.

Rates for this tax in Brazil vary depending on the municipality and the property’s value, typically between 0.2% and 1.5% of the property’s value.

In other words, for a property valued at $57,000 (€51,000) and a rate of 1%, the annual IPTU would be: 1% of 300,000 reais = $228 (€204) USD.

5. Property Transfer Tax (ITBI)

The ITBI is a municipal tax applied to the transfer of real estate properties. This means that for every property transaction, the buyer must pay this tax to the municipality where the property is located.

Who must pay the ITBI?

The ITBI is typically the responsibility of the property buyer. However, the parties involved in the transaction can agree on who will bear the cost. This tax is a necessary requirement for the property transfer to be officially registered with the relevant land registry office.

Rates: Between 2% and 4% of the property’s value, depending on the municipality.

Specifically, for a property valued at $38,000 (€34,000) and a rate of 3%:

• ITBI: 3% of 200,000 reais = $1,140 (€1,020).

Taxes in Brazil for legal entities or companies

Just like individuals, businesses must also declare income generated from commercial activities in this country.  The list is long and the calculations overwhelming, but keep reading, and we’ll help you understand them all.

1. Corporate Income Tax (IRPJ)

The Corporate Income Tax (IRPJ) is a federal tax in Brazil that applies to the net profits of companies. All legal entities residing in Brazil, including corporations, limited liability companies, partnerships, and individual companies, are subject to this tax.

Current rates:

• Standard rate: 15% on annual net profit.
• Additional surcharge: 10% on the portion of the annual net profit exceeding $46,800 (€42,000).

Let’s assume a company has an annual net profit of $95,000 (€85,000). The IRPJ calculation would be:

1. Standard rate: 15% of $95,000 (€85,000) = $14,250 (€12,750).
2. Additional surcharge:

• Excess profit: $95,000 (€85,000) – $46,800 (€42,000) = $48,200 (€43,000).
• 10% of $48,200 (€43,000) = $4,820 (€4,300).

3. Total IRPJ to be paid:

• Sum of the basic rate and the additional surcharge: $14,250 (€12,750) + $4,820 (€4,300) = $19,070 (€17,050).

2. Social Contribution on Net Profit (CSLL)

The CSLL is a federal tax in Brazil intended to finance social security. It applies to the net profit of companies and is mandatory for all legal entities residing in the country.

Current rates:

• Financial institutions: 22%
• Insurance companies: 16%
• Other companies: 10%

3. PIS and COFINS

The Social Integration Programme (PIS) and the Contribution to Social Security Financing (COFINS) are federal taxes in Brazil aimed at financing social programmes and social security, respectively. Both taxes apply to the revenue of corporations, limited liability companies, partnerships, and individual businesses. Imports of goods and services are also subject to these taxes.

PIS and COFINS rates vary depending on the company’s tax regime and the nature of its operations:

4. Tax on Industrialized Products (IPI)

The IPI is a federal tax on the production and import of industrialized goods. The rates vary by product, generally ranging from 0% to 15%.

Example:

• Product: Home appliance.
• Product value: $190 (€170).
• IPI rate: 10 %.
• IPI: $19 (€17).

5.  Tax on the Circulation of Goods and Services (ICMS)

The ICMS is a state tax that applies to the circulation of goods and certain services. From April 2025, a minimum of 20% will apply to international purchases. This applies to e-commerce and orders from abroad.

Example:

• Product value: $190 (€170).
• ICMS rate: 20 %.
• ICMS: $38 (€34).

6. Tax on Services of Any Nature (ISS)

The ISS is a municipal tax that applies to the provision of services. The rates vary between 2% and 5%, depending on the municipality and the type of service.

Example:

• Service value: $380 (€340).
• ISS rate: 3 %.
• ISS: $11.40 (€10.20).

7. Contributions to the National Institute of Social Security (INSS)

Companies must contribute to the INSS to finance the social security of their employees. The general rate is 20% of the payroll.

Example:

• Monthly payroll: $9500 (€8,500).
• INSS (20%): $1,900 (€1,700).

In summary…

Taxes in Brazil for individuals and companies

Tax benefits in Brazil

The number of taxes in Brazil may seem high to many, but both individuals and businesses can also access a range of benefits that facilitate migration, business creation, and establishing economic activities in the country. Below, we present a table with the most relevant benefits available:

Tax benefits in Brazil

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Frequently Asked Questions about taxes in Brazil

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