8 Reasons to Invest in Brazil’s Real Estate

8 Reasons to Invest in Brazil's Real Estate

By Jose Santiago
Brazil has become one of the most desired countries for foreigners looking to acquire a second home, to live or retire, and also for people just looking to investing in real estate. There are many reasons as to why Brazil is one of the best emerging countries to invest in real estate now, here they are:

1. Natural beauty and weather: Brazil is internationally known for its natural beauty, beaches, nice weather, carnival, music and culture.

2. Solid and secure ownership: Brazil is one of the few countries that allows foreigners to own the free hold or fee simple ownership of its real estate.

3. Underdeveloped real estate market: Due to continuous years of recession and lack of purchase power during the 80s and 90s.

4. Buyers market: The quantity of real estate for sale far supersedes the amount of existing prospective buyers.

5. Inflation under control: the government has kept inflation controlled for decades now.

6. Housing Deficit and Population Growth: Brazil has a 7.2 million unit housing deficit. Moreover, every year the demand is increased by an estimated figure of around 900 thousand homes, nationwide; and on the other hand, only 270 thousand homes were built in 2005, for example.

7. Lower interest rates: Interest rates continue to drop gradually. Several economists believe that by late 2007, Brazil should have become an investment magnet country. They believe that the steady fiscal reforms and economic stability should allow Brazilian interest rates to drop even more significantly, which can already be confirmed. Source: Secretaria da Fazenda do Governo do Brazil (http://www.receita.fazenda.gov.br/Pagamentos/jrselic.htm). It would first change the shift from banking and stocks investments and create a boom in the mortgage lending industry which is almost non-existent now. With more money towards this area of investment, gain in value is undeniable.

8. Compulsory Investment in Housing: Brazil's current main sources of mortgage funding include FGTS (Government fund that manages payroll taxes) and saving accounts. There is a mandatory allocation of part of each of these funds in the housing sector by the government and by the private banks. Plus, the analysts expect that commercial banking mortgages are forecasted to increase between 30 to 40% in 2006.

In conclusion, all indicators show a huge potential and growth for this sector in Brazil and if you are an investor or just someone looking for a second home now, Brazil is the place to look for it..

Jose C. Santiago
Multinvest / Elite International
Licensed Attorney – Brazil
Licensed Real Estate Agent – USA – São Paulo, Brazil. Should you have any questions, related to this matter or any other legal questions, please feel free to contact me.

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Permanent Visas in Brazil

Permanent Visas in Brazil

By Jose Santiago
Immigration visas to Brazil will be granted only to applicants who satisfy special requirements established by the Brazilian National Immigration Council or the Ministry of Labor. In principle, there are seven cases in which a foreigner can obtain a permanent residence visa in Brazil:

1. The administrator, manager or director of a professional or business corporation
This category is designed to cover inter-company transfers. Thus, the applicant must already be employed outside of Brazil by the parent company or by an affiliate or subsidiary of the company that proposes to employ him inside Brazil. However, there is no minimum time for that previous employment. Necessary documents for the first step will include:

Proof that the applicant is employed outside Brazil by the parent company, or an affiliate or subsidiary of the Brazilian hiring company;

A demonstration that the Brazilian company is bringing in specialized labor that will transfer technology, increase productivity and/or bring social benefits;

Proof that the company outside of Brazil or its parent has effected total foreign-capital investments of at least US$ 200,000 in the employing company in Brazil for each visa requested.

2. Administrator, manager or director of a start-up company
Planned and recent start-up companies may apply for a maximum of three visas, essentially for the executives who will get the operation off the ground. The following conditions will apply:

Proof that the non-Brazilian company has been in business outside of Brazil for at least five years;

Power of attorney granted by the foreign investor to its new legal representatives for the purposes of setting up the company in Brazil;

A visa of this type will be issued initially for two years. The applicant company must demonstrate that after this period it will be able to meet the minimum investment or job creation criteria laid down for transfers to an established company (see above).

3. Investor
A foreigner who intends to remain permanently in Brazil and will invest foreign funds in productive activities. This category was planned for those foreigners who wish to invest funds (minimum of US$ 50,000) in any kind of productive activity in Brazil.

4. A researcher or high level specialist
The applicant must supply:

A document from a Brazilian research institution manifesting its interest in the services of the researcher;

A curriculum vitae and appropriate academic references and diplomas.

5. Retiree
A retired foreigner, over 50, who will transfer to Brazil the monthly equivalent of at least US$2,000. There is no limit to the number of dependents who may also receive permanent residence visas, but the main applicant must provide proof that they are genuine dependent relatives, as defined in Brazilian law – see Res. 4 of the CNI (National Immigration Council).

The main applicant must prove he has a pension of at least US$2,000 a month. This will entitle him to visas for himself and two dependents. The applicant must demonstrate an additional US$ 1,000/month for each additional dependent, over and above the two already mentioned, and must supply, amongst other things:

A statement from the foreign agency responsible for paying his retirement pension, informing the total monthly sum of the benefit;

A bank declaration authorizing monthly transfer of at least US$ 2,000.

6. Marriage to a Brazilian citizen
This case is covered by a resolution of the National Immigration Council. A permanent residence visa is granted to foreigners married to Brazilian citizens. Application is made to the Ministry of Justice (normally via regional Federal Police offices, which represent the ministry at a State level) or to a Brazilian consulate abroad. Evidence (e.g. marriage certificate, statement from witnesses) should be presented of the matrimonial union. Immigration officials will effect a surprise visit to the couple's home to make sure that the relationship is not a "marriage of convenience" that has the principal purpose of fraudulently obtaining a residence visa.

7. Foreigner with Brazilian offspring
This case is covered by a resolution of the National Immigration Council. A permanent visa is traditionally granted to the foreign parent or parents of a Brazilian child. Application is made to the Ministry of Justice (normally via regional Federal Police offices, which represent the ministry at a State level) or to a Brazilian consulate abroad. The offspring should be economically dependent on the foreign mother or father and be under the guardianship of the applicant.

Should you need further information, feel free to contact me.

Jose C. Santiago, J.D. Licensed Attorney – BRA Title Agent – BRA/USA Paralegal & Licensed Real Estate Professional – USA

 

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Brazil: Myths and Facts Regarding the Investment Visa Program

Brazil: Myths and Facts Regarding the Investment Visa Program

By Jose Santiago
Firstly, the Investment Visa Program was created by the Brazil's National Immigration Council Resolution Number 60/2004 with the intent to increase foreign investments in Brazil by giving, in exchange, direct legal residency to any foreign Investor who brings no less than USD$50,000.

How It Works
In short, after a few initial steps and registrations, a foreign individual must transfer from his or her own bank account abroad at least USD$50,000, which shall be integrated to an existing corporation/business and deposited into its corporate bank account. Once that is done, a certificate is issued by the "Banco Central" qualifying the foreigner individual as a Foreign Investor and with that, he or she may be able to apply for the Investment Visa Program before the "Ministerio do Trabalho e Emprego".

Facts
1. A permanent visa, such as the investment visa, allows a foreigner to live and work in Brazil. An official Brazilian resident alien with a permanent visa enjoys every right and obligation of a Brazilian citizen, except voting and political rights.
2. The resident alien is also allowed to bring his or her family and come and go as he or she wishes. A minimum stay period in Brazil is one entrance to Brazil every other 2 years, in order to maintain his or her residency status before the Brazilian authorities.
3. The investment and transferring of funds must be made throughout and into a Brazilian Corporation. It can be made into his or her newly opened company or into an already existing Brazilian corporation.
4. The corporation can then invest the monies at its convenience, including real estate, bank investments, stocks, etc. You can choose your own investment, but it must be done in the name of your corporation. Most foreigners, usually those who are already purchasing real estate, take advantage of it. But I have seen many foreigners recently investing in stocks and even savings accounts, where interest rates and dividends are much higher than those applied and seen in their native countries.
5. Monies previously transferred to Brazil by foreigner to a Brazilian individual, for any reason; do not fulfill the requirements of this visa.
6. Exceptionally, when bringing less than USD$50,000, a foreigner must produce and file a business plans first, susceptible of a difficult approval of an Immigration Board, and this exception does create employment requirements, as opposed to the transfer of no less than USD$50,000.
7. This type of permanent visa is valid for 5 years, by then the foreign resident must show proof that the corporation is in good standing and that money was not taken back to the country of origin. After the first period of 5 years and one renewal, money can be taken back and there will not be any requirements for the subsequent renewal, which will be valid for 9 years. The second residency carries no requirements and is valid for nine years and may be renewed as many times resident alien deem necessary for the same period.
8. Resident aliens may apply for Brazilian Citizenship throughout this visa after 4 years of official legal residency in Brazil, as long as the foreigner did not leave Brazil for more than 18 months during this 4 years period and is fluent in Portuguese.

Myths
1. There are employment requirements; false, there are no employment restrictions when a foreign investor is bringing/transferring USD$50,000 or more.
2. Monies that were already transferred to Brazil may qualify; false, any foreigner individual that did not followed all the rules and prior registrations of the Visa Program did not fulfill the Program's requirements.
3. Invested money can never be repatriated; wrong, it must remain in the country for at least 5 years and one visa renewal, after that can be sent back. Only the dividends may be sent to home country at any time.
4. The corporation may be closed when the visa is granted; not true, it must be kept open and in good standing before all governmental authorities, including the Tax Authorities, for at least 5 years.
5. The visa can be processed via the Consulates abroad; wrong; procedures are exclusively done in Brazil, the Brazilian Consulates and Embassies abroad only stamp your passport upon the Ministry's of Labor official approval.
6. Brazilian Embassies and Consulates may help you; not true they do not open Brazilian Corporations nor process the visa's approval with the Ministry of Labor in Brazil; all must be done in Brazil.
7. You need a Brazilian partner/share holder; false; the corporation can be wholly owned by foreign individuals and/or foreign corporations. Only the administrator must be a resident in Brazil.

Cautions When Opening Brazilian Corporations
1. By Law, all Brazilian corporations/companies must have a local administrator or registered agent. This person must be a Brazilian citizen or a legal resident alien with no work restrictions. The administrator will be responsible for the corporation's activities before all of the different governmental authorities, banks and third parties. In this case you shall always appoint a person that you trust. If you do not have someone in Brazil that you can trust 100%, licensed Lawyers and Accountants may be the temporary administrator/registered agent while you are waiting for your permanent residency. Having said that NEVER give a full power of attorney to someone you do not know or trust to be the Administrator of your corporation, otherwise this person will have full access to the corporate bank account and manage the funds at his or her discretion without written or prior authorization from the owners.
2. I always suggest my clients to open their own corporations. Nonetheless, you can buy into any existing corporation, however, in this case you will also be buying any hidden debts or liabilities this corporation has. Plus, you will not have any type of control on your invested money and in any corporate decision.

Should you need further information, feel free to contact me.

Jose C. Santiago, J.D. Licensed Attorney – BRA Title Agent – BRA/USA Paralegal & Licensed Real Estate Professional – USA

 

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Legal Aspects of Acquiring Real Estate in Brazil

Legal Aspects of Acquiring Real Estate in Brazil

By Jose Santiago
Brazil is internationally known for its natural beauty, beaches, nice weather, carnival, music and culture. But now, it has become one of the most wanted countries for foreigners looking to acquire a second home, to live or retire, and also for people just looking to investing in real estate due to the reasons set above, along with the low value of its currency and very cheap real estate market.

Defining moments and timing are always the catalyst for any real estate opportunity and the right moment for investing in real estate in Brazil is now. Inflation is at an all time low and the government of Brazil is encouraging foreign direct investment.

Investing in real estate in Brazil is as safe and easy as in any modern country like the US or Europe. All property sales are titled and foreign investors receive the same investment and possession rights as Brazilians.

However, just like in the US or Europe it is never recommended to purchase real estate without the assistance of an experienced professional. In Brazil specifically, due to the innumerable searches and "certidões" in various courthouses and "cartórios" one must have in order to verify the authenticity and security of the deal, along with the legal analysis of all these documents it is literally impossible and rarely seen as a do-it-yourselfer.

Also, special attention should be given to the purchase and sale contract because it must be done in accordance with federal, state and municipal laws, and they do vary from one location to another. Another aspect is the registration of this contract. Some crooked sellers may sell the property many times if the contract is not registered in the proper "cartório", leaving buyers with a complex lawsuit in their hands.

When purchasing real estate in Brazil the two most important things to do are to hire an experienced attorney to represent you during the entire transaction and purchase title insurance. Homeowners, investors and lenders in the United States have been using title insurance for decades. No one would even think of entering into a major real estate transaction without it.

Caribbean and Latin American homeowners, investors, and lenders have historically relied on an opinion letter from an attorney as their safeguard against unforeseen problems stemming from a property purchase. When purchasing or providing financing for any property in Brazil, there is always the risk of related title defects. These defects could include survey errors, title flaws, fraud, forgery, undisclosed liens and encumbrances, or a host of other problems. Attorneys identify risks when researching title and its ownership, but the client must decide whether or not to accept the risks of unforeseen circumstances. If by chance the attorney misses something or could not foresee a hidden defect, a buyer could face substantial losses or damages. Title insurance can insure over defects, thus eliminating, completely, any risk for a buyer. Most importantly, in both cases, these services are not expensive at all.

Assuming that the buyer hired a qualified attorney and purchase title insurance for the property, there are no further worries and the buyer should be able to take advantage of the joys of living in Brazil with peace of mind.

Nevertheless, just like in any other part of the world, after the purchase the new buyer will be responsible for paying property taxes annually. In Brazil, however, they are very cheap; usually from 0.2% to 2% of the assessed value, not market value. But the new owner should make sure that it is paid every year to avoid any legal actions by the government. The property tax bills are usually sent in the beginning of each year.

In conclusion, if a foreigner, with the assistance of experienced professionals, follows the proper procedures to purchase real estate in accordance to the Law, it is very unlikely he or she will suffer any type headaches during or after the purchase process.

I hope to have been able to advise prospective buyers of the dangers, precautions and solutions one must have when purchasing real estate in Brazil.

Jose C. Santiago
Multinvest / Elite International
Licensed Attorney – Brazil
Licensed Real Estate Agent – USA – São Paulo, Brazil. Should you have any questions, related to this matter or any other legal questions, please feel free to contact me.

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The Closing Process in Brazil

The Closing Process in Brazil

By Jose Santiago
Here is a description of the closing process that takes place in Brazil, when buying property.

1. It all starts when the seller signs a purchase and sale contract, known in Brazil as the "Intrumento/Compromisso Particular de Venda e Compra". Although, the agreement is the first step, the purchase and sale agreement is very important, as its contents will serve as the guidelines for the entire transaction. Therefore, it is fundamental that you know and understand all of your rights and obligations under it. Upon execution of it the buyer usually pays a deposit in order to show good faith and to finalize the execution of the binding purchase and sale contract. In Brazil, the buyer usually pays the seller directly, as there are no escrow accounts, nonetheless, it has become very frequent to use international escrow accounts, which brings more security to all parties, but in this case the seller must consent in writing.

2. A Real Estate Company, Realtor, Seller or Attorney begins the acquisition of the title documents. Each property has a series of documents recorded at the local courthouses and registries that reflect prior owners, lenders and other parties who have or had an interest in the property you're buying. Such documents also show any pending lawsuits and liens against the property and/or seller. The examination of such documentation is very important and should be done by a third party who has no interest in the conclusion of the transaction.

3. The property is inspected. In most cases, a professional inspector should conduct a property inspection or survey to ensure the integrity of the property.

4. The "Escritura Publica" is prepared. Usually a notary or an attorney, in conjunction or not, will prepare the document, which will later convey the property rights to the new owner. It also shows the legal description of the property, sale price, and all costs/fees that will be paid at closing.

5. You close on your property. On closing you'll need to provide all the funds, a picture ID, and your Tax ID Card, know in Brazil as the CPF. During the closing, you (and whoever else is buying/selling the property with you) will have to sign an "Escritura Publica de Venda e Compra" before a notary, and once payment is made and "escritura" is executed, the closing process ends, but not the entire process of acquiring the real estate.

6. Registration of "Escritura". Property rights in Brazil are 100% enforceable only when the "escritura" is duly registered, so make sure your attorney or notary registers the "escritura", as soon as possible at the proper Real Estate Registry. Only when this step is completed will you become the official known owner of the property you paid for.

Should you need further information, feel free to contact me.

Jose C. Santiago, J.D. Licensed Attorney – BRA Title Agent – BRA/USA Paralegal & Licensed Real Estate Professional – USA

 

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The Brazilian Resident Investor Program for Foreigners

The Brazilian Resident Investor Program for Foreigners

By Jose Santiago
Brazil's National Immigration Council (NIC) issued Resolution 60/04 on October 6, 2004, which supersedes Resolution 28 of November 25, 1998, with respect to the issuance of permanent visas to alien investors in Brazil. With this newer rule, the amount of an investment needed for obtaining a permanent residency in Brazil was lowered to US$50,000 and this has become the easiest and fastest way of getting residency in Brazil.

You can obtain a permanent residency in Brazil, by investing the minimum amount of US$50K in, for example, a piece of real estate, such as a rental apartment or condo-hotel unit (flat) or even by opening a small business, such as a restaurant.
Under this new Resolution, a permanent visa allows a foreigner to live and work in Brazil with the purpose of investing his or her own foreign funds in productive activities or investing in existing activities in Brazil.

Under the new rules, a permanent visa can be obtained by a foreigner when the following conditions are met:

 a minimum investment of US$50,000, from individual resources in productive activities;
 the investment can be made into his or her newly opened company or in an already existing business.

The procedure is pretty easy for a foreigner; the documentation needed is basically a Power of Attorney, copy of passport, and proof of address in native country.

This is how it works: usually, a corporation is opened for the applicant (in his name – as the owner) and subsequently a bank account will be opened. Afterwards, a registration takes with Banco Central do Brasil and the minimum amount of US$50,000 is authorized to be wired from the investor's account abroad to his new corporate account. It is worth mentioning that when you transfer the money from your bank through the Central Bank of Brazil (Banco Central) to your own bank account in Brazil, that the money remains yours and stays with you at your disposal at all times and under your sole control.

Once this has been completed, Banco Central do Brasil will issue a certificate. With that certificate your visa application will be filed in Brazil, approved, issued and sent to any Brazilian Consulate abroad, as per your request, so your passport can be stamped.

Compared to other Central America Residency Investor Programs, there is no comparison. Central American countries like Costa Rica charge US$50,000 to obtain a second residency, but the investment goes to government tree planting projects that you have no control over and it is doubtful that you will ever receive a penny of profit. Consider it a donation.

Freedom to choose your investment, you can choose your own investment. It could vary a lot, from real estate to new businesses. Most foreigners, usually those who are already purchasing real estate, take advantage. But here are some direct examples:

 Holiday apartment. It might be an excellent idea for you to invest your money, where you could spend your vacations and lease it out while you are not there;
 Flats in São Paulo. Low prices, equity, non-management needs, and monthly income make these a great investment opportunity.

There are many reasons to choose the Investment Program path, some of the reasons for this are:

1. The ability for applicant to work in their own business.
2. Minimum amount of time required per year to be here.
3. The fact that the program is encouraged and pre-approved by the government.
4. Unrestricted. Applicant and family members may apply and work at any endeavor.
5. Includes entire family including spouse and children up to 18 years.
6. Brazilian Citizenship and Passport possible in only 4 year's time.
7. Favorable Tax and Extradition laws.
8. No personal appearance in Brazil is required for processing. You will pick up the Permanent Visa at the Brazilian embassy or consulate in your home country and then you will enter Brazil with the "Resident Investor Status".
9. It is good for 5 years and takes 60 days for a permanent visa to be issued.
10. You do NOT have to remain in Brazil during your residency. You can visit for as little as a few days every two years.
11. If you are single, a Brazilian Citizenship and Passport is possible after only one year of marriage to a Brazilian citizen.
12. A Resident Investor has almost all rights of a Brazilian Citizen except political. You can not vote or get politically involved.

In conclusion, there is no other program that offers a faster and better cost/benefit ratio for a foreigner than the US$50K Investment Residency Program.

Jose C. Santiago
Multinvest / Elite International
Licensed Attorney – Brazil
Licensed Real Estate Agent – USA – São Paulo, Brazil. Should you need additional information, please feel free to contact me.

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Brazil: Squatters Rights (Usucapião) – Be Aware!

Brazil: Squatters Rights (Usucapião) – Be Aware!

By Jose Santiago
Brazilian Law describes the way by which one can acquire the title to land. One of the methods is the "usucapião", known as adverse possession or squatter rights. The current legislation allows a person to get title to land from the actual owner simply by using the land publicly and in a peaceful way, meaning, without the intervention of the actual owner. If this occurs for a specific and continued period of time, this person, know as the possessor, may be able to claim this property as his/her own trough a lawsuit called "Ação de Usucapião" and acquire the title. The theory is that by not disputing someone else's usage of your property, you, as the owner have abandoned your rights to the property which could be then forfeited/transferred to the possessor.

It is important for all foreigners who are purchasing real estate in Brazil to first, make sure that the property hasn't already been taken by a possessor. Even if the broker verbalizes in that way, and the seller shows a valid and legal public deed drafted by a public notary at a "Cartorio" nearby, a careful and professional analysis of this document is necessary. In some cases there can be a public deed of conveyance, but the deed will only transfer possession rights, giving the impression to the unaware foreigner that the property is titled, when is not and worse, it belongs to someone else.

Secondly, it is never recommended to purchase these possession rights, although they are quite cheap when compared to regular real estate prices. A buyer has no guarantees that later on a Court Summons won't be delivered at his doorsteps demanding them to leave the premises immediately, thus losing the land and everything that was built on top of it.

Finally, after purchasing real estate, those who have second homes in Brazil must be able to keep property from being abandoned. Also, make sure that all utility bills and property tax bills are in your name and are paid by you, if these steps are followed; "usucapião" can never happen to you.

Should you need further information about "usucapiao", feel free to contact me..

Jose C. Santiago
Multinvest / Elite International
Licensed Attorney – Brazil
Licensed Real Estate Agent – USA – São Paulo, Brazil. Should you need additional information, please feel free to contact me.

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Tax Information for Foreigners in Brazil Part 1

Tax Information for Foreigners in Brazil Part 1

By Jose Santiago
Taxation of Individuals
In order to keep and maintain your CPF number valid, once it has been issued to you, you have to do an income tax declaration or a declaration of exempt every year (except the year you received the CPF). This will depend on your taxable income and other circumstances, based on them, currently; we have the two options of declaration:

1. Declaração de Imposto de Renda (Declaration of Income Tax)

If you earn R$12,696.00 or more per year. For a complete list of circumstances where one is obligated to do such declaration, please visit this Receita Federal page.

2. Declaração de Isento de Impostos (Declaration of Tax Exemption)

If you don't have income in Brazil or if it is less than R$ 12,696.00 per year. For a complete list of circumstances and requirements to do such declaration, please visit this Receita Federal page.

Such declarations can be made by your attorney, CPA, agent or by yourself via Internet on the website of Receita Federal at http://www.receita.fazenda.gov.br/.

The Declaração de Imposto de Renda is usually done in March and April and the Declaração de Isento de Impostos, in October and November of every fiscal year.

Care is required when filling out the forms, as the information provided can have legal consequences. This article isn't intended to serve as legal advise on how to do it yourself, it is merely explanatory, please always consult a professional.

If you failed to file one of these declarations for the first year, your CPF will have a notation on your number and, if you don't do any of these declarations for the next two years the CPF will be suspended. In order to re-activate the CPF you will have to go to the nearest office of Receita Federal and justify why you did not do the declaration(s). If accepted, most likely, you will have to pay a fee and your CPF will be re-activated, but be warned, it is a big hassle to go over all of this, especially for those who do not speak Portuguese fluently.

Another important aspect is that if Receita Federal notices one person has made several applications, or even has multiple CPF registrations, all of them will be permanently revoked.

Part 2 is on next Blog…

Jose C. Santiago
Multinvest / Elite International
Licensed Attorney – Brazil
Licensed Real Estate Agent – USA – São Paulo, Brazil. Should you have any questions, related to this matter or any other legal questions, please feel free to contact me.

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""Looking For Great Music Sounds""   

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………………………………………………………………..

        

Tax Information for Foreigners in Brazil Part 2

Tax Information for Foreigners in Brazil Part 2

By Jose Santiago
Taxation of Individuals
We contine with part 2 of Jose's article helping foreigners who live in Brazil understand how the tax system works. To read part 3 click the relevant link at the bottom of the article.

Tax Basics

Q. When is the tax year?

A. For income tax purposes, the fiscal year is the calendar year. However, for an individual, the taxable period is the calendar month, not the year. An annual calendar year tax declaration also is required, and the tax rates are annualized to even out the fluctuations of monthly income.

Q. How will I be taxed in Brazil?

A. If you are a tax resident your income will be subject to personal income tax (at graduated rates up to a maximum of 27.5%).

If you are non-resident, you are taxable only on income from Brazilian sources, at a rate of 25% at source (15% if unearned income). There is no tax on foreign income (i.e., income received abroad), or obligation to file an annual income tax return, until you become resident.

Q. How is tax residence determined?

A. A Brazilian national is always regarded as resident in Brazil unless he or she leaves the country permanently. If you are the holder of a permanent visa or a temporary work permit visa you will be regarded as a resident upon arrival in Brazil.

If you are not a Brazilian national and come to Brazil for any other reason you will be treated as resident for tax purposes if you stay in Brazil for more than 183 days (consecutive or not) in any 12-month period. In such circumstances your initial residence period will start on the day following the date you exceed the 183-day period.

Residence status, once acquired, continues for 12 months after final departure from Brazil unless tax clearance is obtained. This should be obtained when leaving Brazil to become a non-resident.

Q. Are there any regional or state taxes?

A. There are no regional income taxes imposed in Brazil.

Married couples are taxed jointly on all income if one spouse has no income and is listed as a dependant on the other spouse's return. In all other cases, married couples are taxed separately.

Q. What rate of tax will I pay in Brazil?

A. Graduated rates apply to all income except certain Brazilian investment income, which is subject to a flat rate. The rates are the same for married and single individuals.

Q. Can I claim a tax deduction for charitable contributions?

A. The full amount of qualified charitable contributions to approved Brazilian charities is allowed as a credit against tax liability, subject to a limit of 6% of the total tax liability.

Q. Are any other tax deductions available?

A. The following deductions are allowable for all resident individuals:

 Alimony and court-ordered child support
 Certain pension payments to persons over age 65
 Expenses deductible in computing self-employment income
 Payments made to certain medical professionals and hospitals
 Education expenses (up to a limited annual amount of R$1,998)

Resident taxpayers are also entitled to a deduction for their dependents in computing monthly taxable income, and annual taxable. For 2004 this deduction is R$106 per dependent per month.

Q. I will also be paying tax in my home country. Am I being taxed twice?

A. No. A foreign tax credit will usually be claimed on your home country tax return for Brazilian taxes paid on Brazil-source income. Alternatively Brazilian source income may be exempted on your home country return. The method used to mitigate double taxation will depend on your home country's tax legislation, and the nature of any tax agreement between Brazil and your home country.

Part 3 is on next Blog…

Jose C. Santiago
Multinvest / Elite International
Licensed Attorney – Brazil
Licensed Real Estate Agent – USA – São Paulo, Brazil. Should you have any questions, related to this matter or any other legal questions, please feel free to contact me.

   "For Many Questions Answered Quickly"

    

Click On Me Running    To Talk Live    Or Skype  

Bob Ritchie    bob_usa_brazil    user name Skype

    Click On Me On Computer To Chat Live

Hiatus 

More About Me

CLICK HERE: American Guy Living In Brazil On MySpace.Com

More About Me

Click Onto SunSet Picture To Save And Send AS A GREETING CARD

More About Me

Click Onto Welcome to the Faith Thoughts Daily Devotional

 

Email:

bob.ifloripa@gmail.com    

robertritchie@brturbo.com.br    

""Looking For Great Music Sounds""   

"Click Onto Pirate Jack"   

"A New Window Will Open"

"Just Minimize While You Keep Looking"

………………………………………………………………..

        

Tax Information for Foreigners in Brazil Part 3

Tax Information for Foreigners in Brazil Part 3

By Jose Santiago
Taxation of Individuals
We contine with part 3 of Jose's article helping foreigners who live in Brazil understand how the tax system works. To read part 4 click the relevant link at the bottom of the article.

Tax Administration
Q. Do I need to file a Brazilian tax return?

A. All tax residents who earn in excess of a fixed amount per year must file a Brazilian Tax Return.

All tax residents holding assets and investments (including shares) located abroad must also present a specific declaration (the so called "Capitais Brasileiros no Exterior – CBE") to the Brazilian Central Bank disclosing such assets and investments. Failures or omissions will be subject to heavy penalties. The due date for the declaration is the last working day in May of the year following the applicable tax year.

Q. When does it need to be filed?

A. Taxpayers must file income tax returns by the last working day of April of the year following the applicable tax year.

Q. What is the procedure for paying tax?

A. Brazil has a system of monthly withholding from income. Payments must also be made by the taxpayer in respect of income not subject to withholding.

In general, individuals with income that is not subject to withholding (in the case of expatriates, this includes offshore compensation, interest, dividends, rents, etc., but not capital gains) are subject to a monthly payment of income tax (carnê leão) calculated at the monthly rates. The advance payment must be paid on or before the last working day of the month following the month when the income was received. Payments are made via voucher at any commercial bank. The advance payment is credited against the liability of the annual income tax.

Withholding and carnê leão are both calculated using the monthly tax rates on monthly taxable income (gross less allowances for dependents, social security, etc.). An individual may compute the tax on income subject to and not subject to withholding reduced by the tax actually withheld to arrive at additional total tax due. This computation method eliminates the duplication of the lower rates. If this method were not used, the underpayment would be due with the annual return.

When the annual return is filed, the liability is determined, and the balance due can be paid in one lump sum or divided into six monthly payments. When the installment method is chosen, the first payment is without interest and the remaining five payments are subject to interest at the monthly average rate of federal treasury bonds (SELIC).

Tax – Income from employment

Q. Will non-cash compensation be taxable (e.g. housing)?

A. Housing allowances or company-provided housing is taxable to an employee at graduated rates.

Other benefits received by an employee from an employer, such as moving expenses, home leave, and language lessons and use of a car may not be fully taxable if structured in certain ways.

Q. I will be working in different countries while living in Brazil. Will all of my employment income be taxable in Brazil?

A. Residents of Brazil are subject to Brazilian income tax on worldwide income regardless of the source of that income.

Non-residents are subject to income tax on Brazilian-source income only. It should be noted that in most cases, the source of payment is used to determine the source of income. Therefore payments made in Brazil will be considered to have a Brazilian source and payments made outside Brazil to have a foreign source, and so non-residents should arrange for payments of income to be structured efficiently.

The fourth and final part on next Blog…

Jose C. Santiago
Multinvest / Elite International
Licensed Attorney – Brazil
Licensed Real Estate Agent – USA – São Paulo, Brazil Should you have any questions, related to this matter or any other legal questions, please feel free to contact me.

   "For Many Questions Answered Quickly"

    

Click On Me Running    To Talk Live    Or Skype  

Bob Ritchie    bob_usa_brazil    user name Skype

    Click On Me On Computer To Chat Live

Hiatus 

More About Me

CLICK HERE: American Guy Living In Brazil On MySpace.Com

More About Me

Click Onto SunSet Picture To Save And Send AS A GREETING CARD

More About Me

Click Onto Welcome to the Faith Thoughts Daily Devotional

 

Email:

bob.ifloripa@gmail.com    

robertritchie@brturbo.com.br    

""Looking For Great Music Sounds""   

"Click Onto Pirate Jack"   

"A New Window Will Open"

"Just Minimize While You Keep Looking"

………………………………………………………………..