Income tax: how is the declaration in other countries – 05/31/2023 – Market

Filling out the Income Tax declaration is a task that can be complicated for taxpayers from countries other than Brazil, although our tax system stands out from a technological point of view.

For citizens who earn income from their salary or dividends from a one-person micro-enterprise, the American declaration is quite simple, according to lawyer João Pedro Volz, from the Miami-based firm Saint Joseph Law. One important difference is that in the US there is no declaration of assets, according to Volz.

For citizens with assets abroad, on the other hand, the American declaration is much more complicated than the Brazilian one and requires the completion of additional forms.

He also points out that the Brazilian declaration is made in a system that is technologically more advanced in many aspects than the American one.

“Here you put CPF in the note, much of the information is crossed, and this is already an almost automatic declaration of everything, while in the US you still have to self-report a lot of information. There is an inefficiency in the American system that does not exist in Brazil. “

Leonardo Freitas, an immigration specialist and CEO of the consultancy Hayman-Woodward, says that the North American and Brazilian systems are more complex when compared to those adopted in the United Kingdom and Portugal.

Tax systems vary substantially between countries, reflecting local priorities and economic realities, he said. All four countries offer electronic filing. Refunds are generally faster in Brazil and the UK.

“Each system has its own peculiarities, and the ease of declaration will depend a lot on the taxpayer’s individual situation. In any case, the objective is the same: to finance public services and ensure that everyone contributes according to their economic capabilities”, says the CEO from Hayman-Woodward, a global mobility consultancy with offices in Brazil, USA, Europe and Asia.

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Income tax: comparing the US, Brazil, Portugal and UK systems

USA
The income tax return is notorious for its complexity. Taxpayers must report a variety of income sources, from salaries and investments to rental property and foreign earnings. The Internal Revenue Service (IRS) offers the electronic filing option, but refunds can take anywhere from a few weeks to several months. The highest federal income tax rate is 37%

Brazil
The process is known for its complexity, due to the variety of deductions and exemptions available. Brazil offers an electronic filing system, and refunds are generally quick. The highest rate is 27.5%

Portugal
The Income Tax system is less complex than in the US or Brazil, but still requires some familiarity with the tax code. Portugal also offers electronic declaration, and the refund is relatively quick. The highest rate is 48%

UK
In the United Kingdom, many taxpayers are exempt from reporting Income Tax due to the Pay As You Earn system, which automatically deducts taxes from wages. For those who need to declare, the process is generally straightforward, and electronic filing is available. Refunds are usually processed within a few months. The highest rate is 45%

Source: Hayman-Woodward, global mobility consulting firm with offices in Brazil, USA, Europe and Asia

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