Brazil Enacts 17.5% Flat Tax on Crypto Gains, Ending Exemptions for Small Traders

The Brazilian government has introduced a sweeping change to its cryptocurrency tax framework, implementing a flat 17.5% tax on all individual crypto profits under a new provisional measure, MP 1303. The policy marks the end of a long-standing exemption that had allowed smaller investors to avoid taxes on lower-volume trades.

Previously, individuals were exempt from capital gains tax on crypto sales of up to R$35,000 (approx. $6,300) per month. Profits exceeding that threshold were taxed progressively, with rates reaching up to 22.5% for high-volume gains above $5.4 million.

The newly adopted flat tax eliminates this tiered structure. As a result, small investors will see increased tax burdens, while larger investors may benefit from lower effective rates, according to Portal do Bitcoin.

The updated policy applies to all crypto assets, regardless of whether they are held domestically or on foreign exchanges and self-custody wallets. While investors will still be allowed to offset losses, this can now only be done within a rolling five-quarter window—a provision set to become more restrictive starting in 2026.

Officials say the tax overhaul is designed to boost government revenue, especially after the administration backed off plans to raise the IOF financial transaction tax—a proposal that had met strong resistance from both the financial sector and lawmakers.

The crypto tax revision comes as part of a broader fiscal update that also affects fixed-income investments and online betting platforms. Fixed-income earnings will now face a flat 5% tax, while online gambling operators will see their tax rate climb from 12% to 18% on gross revenue.