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Is Forex Trading Taxable in Brazil

Finding a reliable, well-regulated Forex broker in Brazil may be a overwhelming task for investors due to the legal environment and nature of the market. Until recently, the South American country had strict controls, rules and regulations on the equity markets which made investing practically impossible.

  

Choose your quick section of our is Forex Trading Taxable in Brazil below

A quick Overview of our is Forex Trading Taxable in Brazil Review:

 

This has seen a positive change and authorities are now allowing Brazilian Traders to access the largest stock and foreign exchanges in the world.  The foreign exchange market (Forex) is extremely well-regulated in Brazil and Forex trading has become popular among local investors.

 

Forex legislation in Brazil

 

Only a select few online brokers are actually based in Brazil  and Brazilian traders will need to find a leading international broker who accepts Brazilian traders and possibly provide Portuguese-language websites and accepts deposits in Brazil’s local currency, the real (BRL).  In fact, Brazilian-based Forex traders will be required to have a trading account in the BRL in order to access the Forex market and will only be allowed to trade under certain circumstances. It is recommended that Brazilian traders register with a broker licensed by the Central Bank of Brazil, or Banco Central do Brazil (BCB). However, Forex Brokers are not required to hold local BCB licenses.  Up until 2005, Brazilian Forex traders were only allowed to execute trades if they had been authorized to do so by the Central Bank in advance. Each Forex contract was carefully monitored by the BCB. This made Forex trading in Brazil extremely complex. Most investors were put off from the trade due to the non-user-friendly environment and lack of administration. However, since this time, Forex trading regulations have been relaxed with the passing of CMN Resolution 3265, which was then modified by Resolution 3568 in 2008.

 

According to the amendments made, legal entities and individual traders are now allowed to buy and sell foreign currency and perform international transfers of any kind as long as they are in the Brazilian currency. Investors can now legally trade Forex pairs without having to obtain prior authorization by the BCB and there is also no limit set on the amount which is traded if the counterparty is an agent authorized by the BCB.

 

With this being said, there are certain regulations with which traders must comply. Firstly, each operation in the foreign exchange market will be recorded in the Information System of Central Bank of Brazil (Sisbacen). Secondly, most Forex operations may be freely cancelled upon agreement between the participating parties. The BCB provides simplified forms for recording transactions of up to $3,000 – which cannot be cancelled, written off, changed or closed by early settlement. In Forex Contracts it is not allowed to change the identity of buyers and sellers, the value in BRL, the currency code or the foreign exchange rate.

 

Brazil’s financial Regulators

 

The financial sector in Brazil falls under the control and regulation of several authorities. The main monetary authority in the country is the Banco Central do Brasil or the Central Bank of Brazil (BCB). The main regulatory body for the capital markets in Brazil is the Securities and Exchange Commission of Brazil (Comissão de Valores Mobiliários or CVM) which regulates all participants in the capital markets. This includes stock exchanges, public companies, financial intermediaries, and investors.

 

Forex payment methods in Brazil

 

Some of the most popular payment options are available to Brazilian traders, including credit cards and digital wallets. Brazil also has local payment services which allows locals to easily pay online or in-store in BRL. However, the online payments market is relatively limited by law and only a select few local banks dominate it.  Consumers will be charged an additional tax fee of 6.38% for purchasing goods or services from foreign websites. Credit and debit cards by Visa, Mastercard, and American Express are also  available to Brazilian traders and are largely issued by local banks and are in BRL. Another viable option is e-wallets, including PayPal, ecoPayz, Skrill, and Neteller.

 

Taxation on Forex trading in Brazil

 

According to the IOF legislation, the tax rate applied to  foreign exchange (FX) transactions may be applied at a maximum rate of 25%. However, actual rates have been recorded to be significantly lower.  The IOF rate is zero in regards to foreign exchange transactions in relation to the inflow of revenue which is obtained from the export of goods/services and outflow of funds gained from the import of goods.  However – The import of services is subject to IOF at a tax rate of 0.38%.

 

Capital gains tax in Brazil

 

Capital gains in Brazil are treated similar to ordinary income.  This means that Capital gains is subject to restrictions on the offsetting of capital losses against ordinary profits in certain cases. Capital gains obtained by a non-resident on an investment registered with the central bank will be subject to progressive rates, as follows:

 

  • 15% until BRL 5 million;
  • 5% from BRL 5 million to BRL 10 million;
  • 20% from BRL 10 million to BRL 30 million;
  • 5% over BRL 30 million
  • 25% rate applies if the gains are derived by a resident of a tax haven.

 

Income tax in Brazil

 

Individuals who are tax residents of the country are subject to federal income taxBrazilian income tax rates for individuals in Brazil are progressive and range from 7.5% to 27.5%. The minimum and maximum of each tax rate level is subject to changes each year.

  

Regulated Forex Brokers accepting Brazilian Traders

 

IG

 

IG Group was founded in 1974 and is regulated by the Financial Conduct Authority (FCA) in the U.K. and the Australian Securities and Investment Commission (ASIC) in Australia.

 

Pros and Cons

 

Pros Cons
Used by 178,000+ traders Inactivity Fee
Established in 1974 Limited range of instruments
Regulated by Financial Conduct Authority and ASIC
Min. deposit from $250

 

The country of a traders residency will determine which account type they can open. In most countries, they will only be able to trade forex, CFDs and options.  Traders can choose between two trading platforms, IG’s proprietary trading platform or MetaTrader 4.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account PayPal
Low min deposit Payoneer
Guaranteed stop loss

 

Customer Service is available 24/7 via Phone, Live Chat and Email.

 

Saxo Bank

 

Saxo is a globally regulated, multi-asset class broker which offers traders the option to trade on more than 40,000 instruments covering Forex, CFDs, Stocks, Options, ETFs, Commodities, Futures, Bonds and Mutual Funds from a single account across multiple platforms including their own – SaxoTraderGO and professional-grade SaxoTraderPRO.

 

Pros and Cons

 

Pros Cons
Segregates client funds Doesn’t allow hedging
Established in 2012 Limited range of instruments
Regulated by Financial Conduct Authority Not ASIC Regulated
Min. deposit from $6,500

 

The Saxo Group is regulated in 15 jurisdictions including authorisation from the UK Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC), the Financial Services Agency of Japan (FSA) and many more.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Offers STP Mini account Bank Transfer
Low min deposit Standard account Payoneer
ECN account

 

Customer support is available in nearly 30 different languages via phone, email and an FAQ section.

 

Interactive Brokers

 

Interactive Brokers was founded in 1978 and is regulated by multiple financial authorities including the UK’s Financial Conduct Authority (FCA) and the US Securities and Exchange Commission (SEC).

 

Interactive Brokers offers many account types, which fall into two big groups:

 

  • accounts for individual traders and investors
  • accounts for institutions

 

Pros and Cons

 

Pros Cons
Low trading cost Pro users incur an account maintenance fee if multiple trades are not made
Invest globally in a multitude of products via a single account Not everyone is eligible to open an IBKR Lite account
No minimum balance required
Tools to bring your trading to the next level

 

Trading benefits

 

Tradable Securities Accounts Offered Funding Methods
Stocks Lite Bank Transfer
Fractional Shares Pro
Bonds
Mutual Funds
ETFs
Options

 

Traders can choose between two different web trading platforms:  The Client Portal and Webtrader and IBKR Mobile, Interactive Brokers’s mobile trading platform, is available both for iOS and Android.  Users can trade on Stock, Forex, Option and Futures – to name but a few.

 

Customer Service is available 24/7 via Live Chat, Phone and Email.

 

City Index

 

City Index is a world leader in spread betting, FX and CFD Trading, regulated by the Financial Conduct Authority (FCA).  The City Index trading platform offers traders a range of customisation options, which includes 16 chart types with 65+ indicators specifically designed for investors to perform technical analysis.

 

Pros and Cons

 

Pros Cons
Used by 140,000+ traders Doesn’t allow scalping
Established in 1983 Inactivity Fee
Regulated by Financial Conduct Authority, ASIC and MAS Limited range of instruments
Min. deposit from $25

 

To open a live trading account, traders will need a minimum deposit of at least $25.  City Index offers over 12,500 different instruments to trade, including over 84 currency pairs on the ever-popular MetaTrader4 trading platform.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows hedging Demo account Credit cards
Offers STP Micro account Bank Transfer
Low min deposit Mini account Payoneer
Guaranteed stop loss Standard account
Managed account

 

Multilingual Customer support is available by email, phone, or live chat.

 

XTB

 

XTB is a European broker which was founded in 2002, and has offices in 13 countries across the globe.  XTB is regulated by the UK Financial Conduct Authority (FRN 522157) and has been listed on the Warsaw Stock Exchange since 2016.

 

XTB is a fintech company which combines financial services with innovative technology and it offers clients two platforms to choose from:

 

  • xStation5
  • MT4

 

Pros and Cons

 

Pros Cons
Lowest FX spreads Does not accept U.S. clients
Regulated by FCA (U.K.) Non-FX spread costs are high
Offers protection for client accounts No guaranteed stop loss
Emphasis on customer service No back-testing or automated trading capabilities

 

Traders can choose from 25 crypto CFDs (9 individual coins or 16 crypto pairs) which are available 7 days a week (from 3am Saturday to 9pm Friday). Traders can buy or sell digital coins with 2:1 leverage and 365-day expiry.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Micro account Bank Transfer
Offers STP Mini account PayPal
Low min deposit Standard account Skrill
Guaranteed stop loss Islamic account Payoneer
Offers Negative Balance Protection Neteller

 

XTB support a wide range of languages including English, Spanish, Czech, Chinese, German, French, Italian, Polish, Portuguese, Romanian, Slovenian, Turkish, Arabic, and Russian.

 

Forex.com

 

Forex.com is a platform which can be used for trading foreign currencies and precious metals. Traders can trade over 80 currency pairs as well as silver and gold.

 

Pros and Cons

 

Pros Cons
Segregates client funds Doesn’t offer VPS
Established in 1999 Not ASIC Regulated
Regulated by Financial Conduct Authority
Min. deposit from $50

 

To open a live trading account, traders will need a minimum deposit of at least $50.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account
Low min deposit ECN account
Islamic account

 

Customer support is available by phone, live chat, or email 24 hours a day during market hours.

 

eToro

 

eToro is an online broker which was founded in 2006 and offers CFDs and Social Trading, with a head office based in Cyprus, UK.  eToro is supervised by the Financial Conduct Authority (FCA), Cyprus Securities and Exchange Commission (CySEC) regulatory bodies and has been in operation for over 14 years.

 

Pros and Cons

 

Pros Cons
Used by 6,000,000+ traders Doesn’t allow scalping
Established in 2006 Inactivity Fee
Regulated by Financial Conduct Authority, CySEC, ASIC Limited range of instruments
Min. deposit from $200

 

eToro offers traders two ways to trade: CFDs, Social Trading and eToro traders will need to make a minimum deposit of $200 and the platform can accommodate various levels of traders from beginner to expert.  Traders can trade in a wide variety of over 100 instruments and over 50 currency pairs on eToro’s user-friendly custom trading platform which is available as a browser-based web application. eToro also offers traders mobile apps for Android and iOS, making it easier to keep an eye on and execute trades.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Offers STP Demo account Credit cards
Low min deposit Micro account Bank Transfer
Mini account PayPal
Standard account Skrill
Islamic account Payoneer
Neteller

 

eToro supports a wide range of languages including English, German, Spanish, French, and Italian.  24/6 customer support is available via telephone and support ticket.

 

AvaTrade

 

AvaTrade is an online broker which was founded in 2006 and offers Forex, CFDs, Spread Betting and Social Trading and is a global broker with their head office situated in The British Virgin Islands. AvaTrade is regulated in Europe, the British Virgin Islands, Australia, Japan, and South Africa by ASIC, CySEC and FCA.

 

Pros and Cons

 

Pros Cons
Used by 200,000+ traders Doesn’t offer VPS
Established in 2006 Not FCA Regulated
Regulated by Central Bank of Ireland, ASIC, IIROC, FSA, FSB, UAE and BVI
Min. deposit from $100

 

For those who are looking to start out with AvaTrade will need a minimum deposit of $250 and a demo account is available for those who want to get acquaint with the popular MT4 forex trading platform.  AvaTrade also offer mobile apps for Android and iOS.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Micro account Bank Transfer
Low min deposit Mini account PayPal
Standard account Skrill
Islamic account Payoneer
Neteller

 

Customer support is available by email, phone, or live chat.

 

XM Group

 

XM Group (XM) is a group of regulated online brokers regulated by the Cyprus Securities and Exchange Commission.

 

Pros and Cons

 

Pros Cons
• Low stock CFD and withdrawal fees • Limited product portfolio
• Easy and fast account opening • Average forex and stock index CFD fees
• Great educational tools • No investor protection for non-EU clients

 

XM offers traders more than 1000 financial instruments to trade on both the MT4 and MT5 platforms, including Forex Trading, Stocks CFDs, Commodities CFDs, Equity Indices CFDs, Precious Metals CFDs and Energies CFDsForex trading is available on over 55 pairs, including the major USD, GBP, EUR and JPY pairs.  Traders must take note that XM does not offer binary options or futures.

 

Trading benefits

 

Trading Features Accounts Offered Funding Methods
Negative Balance Protection Micro Wire Transfer
Low Spreads Standard Credit/Debit
Low Commission XM Zero Neteller
Hedging Allowed UnionPay
Scalping Allowed WebMoney
Qiwi

 

Customer Service is available via live chat, Phone and email support.

 

Tickmill

 

Tickmill is a Forex and CFD broker with licences from the UK Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC) and the Seychelles Financial Services Authority (FSA).

 

Pros and Cons

 

Pros Cons
Segregates client funds Limited range of instruments
Established in 2014 Not ASIC Regulated
Regulated by Financial Conduct Authority
Min. deposit from $25

 

Tickmill offers trading on 80+ markets covering Forex, Indices, Commodities and Bonds on the MetaTrader 4 trading platform for Windows, Mac, Web, Android and iOS.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account Neteller
Low min deposit Zero spread account
ECN account
Islamic account

 

Multilingual client service is available via Telephone, Email, Online Contact Form and Live Chat.

 

  

  

Conclusion

 

Forex Trading in Brazil has become extremely popular amongst residents even though the country carries a long list of rules and regulations.  Brazilian traders should take their time when choosing a Forex Broker, ensuring that the firm complies with the countries regulations.

Author Details

Louis Schoeman

Louis Schoeman

Featured Forex and Stocks writer

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