On May 3rd, 2019, the Brazilian Internal Revenue Service published Normative Instruction No. 1,888 (“Normative Instruction”), which establishes and regulates the obligation to provide information on the operations carried out with cryptoactives to the Internal Revenue Service Special Secretariat.
According to the Normative Instruction, cryptoactive is defined as “the digital representation of value denominated in its own unit of account, whose price can be expressed in local or foreign sovereign currency, transacted electronically with the use of encryption and distributed registration technologies, which can be used as a form of investment, an instrument for the transfer of securities or access to services, and which is not legal tender “(article 5, item I).
In turn, exchange of cryptoactive is defined as “legal entity, although not financial, that offers services related to operations carried out with cryptoactive, including intermediation, negotiation or custody, and that can accept any means of payment, including other cryptoactive” (article 5, item II).
In this context, they are obliged to provide information regarding operations to (i) exchange of crypto assets domiciled for tax purposes in Brazil; and (ii) a natural person or legal entity resident or domiciled in Brazil when the transactions are carried out in an exchange domiciled abroad, or are not exchanged.
Such information should be provided monthly to the Brazilian Internal Revenue Service, under penalty of fine, as well as communication to the Federal Public Prosecutor, in the event of indications of crimes of ” money laundering” or concealment of assets, rights and values, provided for in Law No. 9,613 / 98.
Further information, as well as the full text of the Normative Instruction can be found on Brazilian Government´s (“Planalto”) website (http://www.planalto.gov.br/).