Income Tax 2023: how to declare cryptocurrencies and NFTs

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This type of declaration is mandatory for taxpayers who have invested more than BRL 5,000 in any crypto asset or digital currency at the end of 2022. Income Tax 2023 Arte / g1 Transactions made with crypto assets, such as Bitcoin, and capital gains obtained with trading cryptocurrencies and NFTs (non-fungible tokens, in the translation into Portuguese) need to be declared in the 2023 Income Tax. be equated to assets subject to capital gain. UNDERSTAND: What are NFTs? Find out how bitcoin and other cryptocurrencies work LEARN EVERYTHING ABOUT THE 2023 INCOME TAX Therefore, according to the Tax Authorities, these operations must be declared in the “Assets and Rights” form, considering the specific codes and when the acquisition value of each type of crypto asset is equal to or greater than BRL 5 thousand. Cryptocurrency brokerages (exchanges) are also obliged to provide information on the operations of each user of their services, which allows the Tax Authorities to cross-reference information and identify any errors in taxpayers’ statements. What are crypto assets? According to the Federal Revenue Service, a digital representation of value is understood as a cryptocurrency, denominated in its own unit of account and whose price can be expressed in local or foreign sovereign currency. Assets are transacted electronically using cryptography and distributed ledger technologies, and can be used as a form of investment, instrument for transferring values ​​or accessing services. For the Tax Authorities, crypto assets are not legal tender. What are NFTs? NFTs are non-fungible tokens, i.e. tokens that cannot be replaced. They are unique and irreplaceable codes, which become a digital stamp and can be associated with a photo, video or any type of digital file. These files are registered by the blockchain system — the same technology that also involves digital currencies and that works like a large accounting book, which records transactions, always with encryption. According to finance expert Michelle Veronesi, the number of investors in crypto assets in Brazil already exceeds that of investors in the stock market. “Therefore, it is important to carefully check and correctly indicate the asset class purchased on your statement,” she said. Who is required to declare? According to the Revenue, the obligation to provide information applies to individuals and legal entities that carry out any of the following operations with crypto assets: Purchase and sale; Exchange; Donation; Crypto asset transfer to the exchange; Withdrawal of crypto from the exchange; Temporary assignment (rent); Donation in payment (exchange of one good for another); Issuance; Other operations involving the transfer of crypto assets. For the conversion of values ​​into reais, the Tax Authorities explain that the value expressed in foreign currency must be converted into national currency at the quotation of the United States dollar established by the Central Bank of Brazil (BCB) for the sale and on the date of the operation or balance . The calculation is based on the Ptax (reference rate for foreign exchange contracts). Also required to provide information to the Revenue: The crypto asset exchange domiciled for tax purposes in Brazil; The individual or legal entity residing or domiciled in Brazil when the operations are carried out in a crypto asset brokerage abroad or when the operations are not carried out in a brokerage. In this case, the information must be provided whenever the monthly value of the operations, individually or jointly, exceeds R$30,000. How to declare? Cryptoassets are considered financial assets and must be informed in the “Assets and rights” form, in “Group 08 – Cryptoassets'” and with the specific code, using the acquisition value of the asset as a basis. The program provides five different codes for declaring crypto assets. See below the codes and what content must be described in the “Discrimination” field. 01 – Bitcoin (BTC): The taxpayer needs to fill in the amount he has of the cryptocurrency and where this asset is in custody (company name with CNPJ or own custody); 02 – Other cryptocurrencies, known as altcoins: Here, the taxpayer needs to inform the type, quantity and where the asset is held in custody (company name with CNPJ or own custody). According to the Tax Authorities, the different types of crypto assets must be separate items in the declaration. For example: Ether (ETH), Ripple (XRP), Bitcoin Cash (BCH) and Litecoin (LTC); 03 – Stablecoins: In this case, the taxpayer also needs to inform the type, quantity and where the asset is held in custody. Some examples are: Tether (USDT), Brazilian Digital Token (BRZ), Binance dollar (BUSD), DAI, TrueUSD (TUSD), Gemini dollar (GUSD), among others; 10 – NFTs (non-fungible tokens): The taxpayer must also inform the type, quantity and where the asset is held in custody. Some examples are tokens representing rights over digital or physical goods, such as collectibles, works of art and real estate; 99 – Other crypto assets not included in the previous codes: In this case, it is also necessary to inform the type, quantity and where it is held in custody. Some examples are: Fan tokens, precatory tokens, consortium tokens, carbon credit tokens, receivables, among others. Another point of attention mentioned by Veronesi is when the taxpayer invests in crypto assets through ETFs (index funds). “In this case, the correct group to be inserted is ‘group 07 – Funds’, since they are not direct assets. As for investments in crypto assets abroad, attention is needed to fill in the ‘Discrimination’ field, informing the name of the broker , the country, the date of acquisition of the asset, the value in reais and the conversion value in the corresponding currency”, added the expert. See more details on how to declare operations with crypto assets. How is the tax charged? The tax is levied on profits from negotiations that exceed R$ 35,000 per month, according to progressive rates established according to profit (15% to 22.5%). That is, operations with a lower or equal value are exempt from taxation. It is important to highlight that the exemption for sales of up to BRL 35,000 applies to the set of crypto assets sold in the month, regardless of type. As in many variable income investments, it is the investor himself who must calculate the earnings. Payment of the tax must be made by means of a Federal Tax Collection Document (Darf) by the last working day of the month following the transaction. For exchange operations abroad or transactions that are not carried out at a brokerage firm, the disposal limit, for tax exemption purposes, will be R$30,000. Such operations must be declared to the Federal Revenue in a specific program in the National Collection system, available on e-CAC. 4 – What care to take? In addition to paying attention to the correct completion of the required fields in the declaration, the taxpayer needs to be careful to inform the correct value of the acquisition cost of the digital assets. All declarations are made in reais and the basic information on the price must always be attributed to the acquisition value of the crypto asset and not to the market value. Among the most common mistakes is leaving the search for information on operations in cryptocurrencies only until the time of preparation of the annual adjustment statement. The IRS guideline is that the taxpayer keep the documentation that “proves the authenticity of the values ​​referring to the acquisition and sale of the reported operations”.

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