Nonresidents in Brazil are liable to tax on income sourced within the country. Married couples are usually taxed jointly, although those married under the separate property regime may opt for separate taxation. A spouse taxed separately cannot be considered a dependent for tax purposes.

Rental Income Tax (Imposto de Renda de Pessoa Física)

Nonresidents are generally taxed on their gross income at a flat rate of 15%. This rate can vary depending on the income type and the taxpayer’s residency status.

Nonresidents from low-tax territories—defined as countries with no income tax or a corporate tax rate under 20%—are taxed at a special rate of 25%.

Corporate Taxation

Income and capital gains earned by corporate entities in Brazil are subject to corporate income tax. The standard corporate income tax rate is generally 15%, with an additional 10% surtax on annual income exceeding BRL 240,000, resulting in an effective rate of 25%.

Rental Income Tax for Corporations

Corporate entities earning rental income from properties in Brazil are also subject to a 15% tax rate on the gross rental income. However, for corporations based in low-tax territories, the rate increases to 25%.

These territories are defined as countries that either do not tax income or have a corporate tax rate lower than 20%.

Withholding Tax

A 15% withholding tax is applicable on dividends and most interest payments made by Brazilian corporations to non-residents. No withholding tax is imposed on dividends paid out of after-tax income but interest and royalties paid to entities in low-tax jurisdictions are subjected to a 25% withholding tax.

This addition ensures a comprehensive overview of both individual and corporate tax obligations concerning rental income, capital gains, and other relevant taxes in Brazil.

Capital Gains Tax

Capital gains from the sale of real estate by nonresidents are taxed at a rate of 15%. The taxable gain is calculated by deducting acquisition and transaction costs from the gross selling price or market value of the property. For nonresidents residing in low-tax territories, capital gains are subject to a 25% withholding tax, effective from January 2004.

Property Taxes

Municipal Tax on Real Estate (Imposto sobre a Propriedade Predial e Territorial Urbana - IPTU)

This tax is levied on urban properties based on an assessment by the local municipality, with typical rates ranging from 1.0% to 1.5% of the assessed value, which is usually below the market value.

Federal Rural Property Tax (Imposto sobre a Propriedade Territorial Rural - ITR)

The ITR is imposed on rural properties located outside urban zones, and it is a federal tax. Tax rates vary from 0.03% to 20%, dependent on the land size and the ratio of utilized area to total land area. Property owners are responsible for paying this tax.

Property Buying/Selling Taxes and Costs