Brazil’s 17.5% crypto tax: How the new rules hurt small investors most

Key Points

1. The new tax imposes a flat 17.5% rate on all crypto transactions above 35,000 Brazilian reais (~$6,300) per month, eliminating the previous tiered system that exempted small traders.

2. Small investors, who previously paid no tax on gains below 35,000 reais, now face a 17.5% tax, while large investors benefit from a reduced rate compared to the previous 22.5% top bracket.

3. The tax now explicitly includes DeFi, NFTs, staking rewards, and offshore assets, closing previous loopholes and regulating previously gray areas.

4. Brazil's tax burden reached 32.32% of GDP in 2024, the highest in 15 years, with the new crypto tax being part of broader fiscal reforms.

5. Compared to other countries, Brazil's 17.5% rate is moderate—higher than zero-tax jurisdictions like the UAE but lower than India's 30% or Japan's up to 55% rates.

6. Enforcement will tighten, with stricter reporting requirements, on-chain monitoring, and reduced loss-carryover windows starting in 2026.

7. Some Brazilian companies, like fintech Méliuz, are adopting Bitcoin as a treasury reserve, holding nearly 600 BTC despite the new tax.