Here’s what to know about taxes when transferring money into Terra do Brasil.
How Brazil regulates large remittances
Americans sent $637 million from the US to Brazil in 2015 through banks and money transfer services. But when sending a lot of money, your recipient could be on the hook for taxes regulated by the Brazilian Department of Federal Revenue.
Gift and donation taxation rates vary among the 26 states of Brazil, ranging from 4% in Rio de Janiero to up to 7% in Santa Catarina. Beneficiaries of these gifts are responsible for declaring and paying this tax with their annual returns by April 30.
What are the penalties for not filing a large remittance?
Brazilians are among the biggest tax evaders worldwide, largely due to an absence of penalties until recently. If you fail to file taxes on a large money transfer today, you could face a penalty equal to 20% of the tax in question. If you’re caught in one of the country’s irregular sweeps for unpaid taxes, that penalty increases to a stiff 75% of the amount you owe.
You could also be hit with jail time of six months to two years, with increased fines for subsequent evading.
Encourage your family and loved ones to include any large remittance on their annual tax return or speak to a tax professional for guidance.
Do I have to report large transfers out of the US?
To be safe, yes. To avoid severe penalties that could come with a failure to report large sums of money into and out of your own country, speak with a professional to guarantee that everything is above board.
By law, banks are required to report cash transactions that exceed $10,000 and transactions of any amount they find suspicious. For independent money transfer businesses, that thresholds can be as low as $1,000.
Sending a lot of money out of the country? Know what the IRS expects of you.
Politics may put a wrinkle in money transfers sent to friends and family in Brazil.
In 2017, Congress submitted a bill proposing a 2% tax on remittances to Latin American countries that include Mexico, Brazil, Honduras and El Salvador — a tax that’s a significant key to fulfilling the Trump administration’s campaign promise to build a border wall between the US and Mexico. We’ll keep an ear to the ground as the situation develops.
How will my recipient receive my remittance in Brazil?
When sending money to your friends and family in Brazil, you’ll typically have the option of a bank-to-bank transfer, cash pickup or mobile wallet delivery.
To pick up your transfer in person, they may need to show ID or a confirmation number. For other transfers — like to a Brazilian bank or money transfer company — they may not need to provide anything to receive it.
As with all international money transfers, be wary of potential fraud and only send money to people you know. Using a reputable provider can safeguard you from potential scams.