Brazilian Taxation US citizen in Brazil - income tax,
QUESTION: I am a USA citizen presently living and working in Brazil and my company has started paying taxes to the Brazilian government. Yet as I read into the Brazilian tax documents it says that I should be taxed as a resident and upon my worldwide income. This would mean declaring interest, stock gains, etc. Is there a tax treaty USA-Brazil and can Brazil verify my holdings or gains other than the Brazil earned salary? Thank you for responding. Herschel ====================================== david ingram replies There is no doubt that if you are in Brazil for more than 183 days, you are taxable on your world income. As a US citizen, you are also taxable on your world income no matter where you live. You will have to calculate both returns and calculate the tax payable on each income item. You will then claim a foreign tax credit for the taxes paid to Brazil on form 1116 (maybe two or three 1116's) of your US 1040. If you have been in Brazil for more than 330 out of 365 days or there for an entire calendar year and have established a bone fide residence in Brazil, the first $80,000 US of your Brazilian earnings are exempt from US taxation by filing form 2555. The $80,000 can be significantly higher if you claim the housing amount as well. If you have the Brazilian return prepared locally, I am quite happy to look after the US side for you. I have access to two Portuguese speaking accountants to look after the translation. We actually prepare a couple of Brazil / US and Portugal / US / Canada returns a year now and one of my 30 year tax associates is married to a Brazilian. Your last question is almost scary. The powers of taxing authorities in these post 9/11 days is very scary. I do not have enough US / Brazil experience to talk from things I have seen personally but I was intimately involved with a world money laundering conference (attended by the finance people from 56 countries) and can tell you that the behind the scenes information I was privy to means that I would never try and hide a penny from either government. There is really no such thing as a secret bank account any more no matter what they try and tell you and that is pretty well proven by the recent jailing of Jerome Schneider. ------------------------------------ The following was put out by the Brazilian Embassy in Washington ========================= Income Tax Obligations of Individuals DISCLAIMER The information provided below is generic and is not a substitute for consulting a tax attorney. The Brazilian Embassy in Washington does not accept responsibility for imprecise or erroneous impressions that may arise from reading the text that follows. Individuals Subject to Double Taxation in Brazil and the United States Brazilian tax legislation provides that taxes may be levied on income and capital gains received by individuals residing in Brazil from sources abroad, as well as income and capital gains received in Brazil by individuals residing abroad (Instrução Normativa SRF no. 73/98, of June 23, 1998). In the case of double taxation; that is, when individuals are subject to income tax obligations in Brazil as well as in the United States, Brazilian tax legislation provides that double taxation may be avoided: a) in accordance with provisions of international agreements, treaties or conventions against double taxation, signed by Brazil, or b) pursuant to reciprocal tax treatment legislation (Instrução Normativa SRF no. 73/98, art. 1, § 2). At this time there is no double taxation agreement, treaty or convention between Brazil and the United States. However, there is reciprocal tax treatment between Brazil and the United States. The tax legislation of the United States provides for reciprocal tax treatment between the United States and several countries, including Brazil. Article 901 of the U.S. Internal Revenue Code provides foreign tax credit with respect to taxes paid to foreign governments. Pursuant to applicable Brazilian legislation, proof of reciprocity of tax treatment may be submitted in the following manner: By presenting copies of the applicable U.S. tax law published by the United States Government Printing Office, or the applicable foreign legislation published by the official government gazette of the country where the income was received, duly authenticated by a Brazil diplomatic or consular post, or By presenting an affidavit by a Brazilian diplomatic or consular post attesting to the existence of tax treatment reciprocity between Brazil and the United States. Thus, the taxpayer is allowed to prove the existence of reciprocity of tax treatment between Brazil and the United States, in order to apply the foreign tax credit corresponding to the amount already paid as income tax to the United States government, to the applicable tax rate owed to the government of Brazil, deducting that amount from the total amount owed to the government of Brazil (Instrução Normativa SRF no. 73/98, art. 1, § 2). Pursuant to a recent amendment to Brazilian tax legislation, an individual who resides in Brazil but leaves the country permanently during the calendar year, must submit, at the time that he or she requests a Negative Certificate of Federal Tax Debts and Assessments, a Certificate of Permanent Departure from Brazil relative to the period between January 1 and that date, as well as the ones relative to the previous calendar years, if mandatory and not submitted (Instrução Normativa SRF n. 167/99. Art. 9). Jurisdiction: District of Columbia, Kentucky, Ohio, Maryland, Virginia and West Virginia Open to public: 8:00 a.m. to 1:00 p.m. Monday through Friday, except holidays Consular Service 3009 Whitehaven Street, N.W. Washington, D.C. 20008 Phone: (202) 238-2828 Fax: (202) 238-2818 e-mail: consular at brasilemb.org ==================================================== Answers to this and other similar questions can be obtained free on Air every Sunday morning. Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee Wealth Management and I, David Ingram host a LIVE talk show called "ITS YOUR MONEY" Those outside of the Lower Mainland will be able to listen on the internet at www.600AM.com <http://www.600am.com/> Local calls are taken at (604) 280-0600 and Long Distance calls (BC only) are taken at 1( 866) 778-0600 Callers to the show are invited to attend free seminars on financial planning with such specialities as deductible mortgage interest. They are held at Fred Snyder's Office at 1764 West 7th in Vancouver - (604) 731-8900 for more information. ========================================= David Ingram's US/Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Res (604) 980-3578 Cell (604) 657-8451 (604) 980-0321 Fax (604) 980-0325 Email to taxman at centa.com <mailto:taxman at centa.com> www.centa.com <http://www.centa.com> www.david-ingram.com <http://www.david-ingram.com/> Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist in connection with personal or business affairs such as at www.centa.com <http://www.centa.com> . If you forward this message, this disclaimer must be included." Be ALERT, the world needs more "lerts" ============================== This from "ask an income tax and immigration expert" from www.centa.com <http://www.centa.com/> or www.jurock.com <http://www.jurock.com/> or www.featureweb.com <http://www.featureweb.com/> . David Ingram deals on a daily basis with expatriate tax returns with: multi jurisdictional cross and trans border expatriate problems for the United States, Canada, Mexico, Great Britain, the United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas, San Antonio and Houston Texas Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax and ImmigrationWizard Income Tax and Immigration Guru Income Tax and Immigration Consultant Income Tax and Immigration Specialist Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist expert preparer consultant expatriate anti money laundering money seasoning FINTRAC E677 E667 4789 4790 TDF-90 Reporting $10,000 cross border transactions ========================= Alaska, Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Garland, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon. 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