Federal Revenue Service of Brazil creates a new accessory obligation on cryptocurrencies

On July 11, the Brazilian Federal Revenue Service (“BFRS”) published Normative Instruction No. 1,888/19, which was further amended by Normative Instruction No. 1,899/19 and created the obligation of periodically reporting to the tax authority information on transactions with cryptocurrencies.

Such reporting obligation commenced on August 1 and comprises transactions with bitcoin, ethereum, ripple and any other cryptocurrency. According to the BFRS, the purpose of the new regulations is to prevent crimes such as money laundering, tax evasion, drugs and weaponry financing and terrorism.

João Carlos Mendonça, partner of the Corporate Finance Department of Felsberg Advogados, notes that certain transactions with cryptocurrencies may prevent the disclosure of the parties involved. As such, mechanisms for assuring the lawfulness of these transactions are more than welcome.

Yet, “in practice, the new regulations reveal the intention of transferring the BRFS´ obligation of inspecting taxpayers for those who will carry out the transactions with cryptocurrencies”, says Mendonça, to whom the new obligation is an additional and burdensome bureaucracy.

It´s another bureaucracy that may either turn unfeasible or add unnecessary costs to transactions, as well as to startups´ financing, which generally cannot bear the costs related to the implementation and compliance with the regulations recently brought up.”

The lawyer´s opinion is shared by Gabriel Paranaguá, senior associate of the Tax Department of Felsberg Advogados, to whom the new obligation adds a further burden “to the very high costs that companies and individuals are already subject to, due to the incapacity of the BFRS to duly inspect the taxpayers.”

Paranaguá explains that annual studies conducted by the World bank alongside PWC (Paying Taxes) show that Brazil leads the position on the time and resources spent by companies for complying with tax obligations. According to the lawyer, in 2019 the Paying Taxes report informs that 83% of the Southern America economies spend more time to comply with tax accessory obligations than the rest of the world.

Every year we are champions on the Time to Comply issue. While the world average is currently 237 hours, Brazil is the record holder among the economies, presenting the highest spend of time (and very high indirect costs) with current 1958 hours, in average, to comply with tax accessory obligations. Unquestionably, the government foresees in these transactions with cryptocurrencies a means of increasing its taxes´ revenue. But this should not transfer to taxpayers the responsibility and cost of inspecting private entities.”

Technical aspects

The referred normative instructions regulate technical aspects in the process of reporting transactions with cryptocurrencies. According to Mendonça and Paranaguá, information regarding date of the transactions, types of operations and the cryptocurrencies used, the number of assets negotiated, parties involved, as well as the amount of fees charged, among other information, is required by the BFRS.

With the recent amendments to Normative Instruction No. 1,888/19, they note, information concerning the address of each wallet used (both for remitting and receiving the cryptocurrencies) shall be presented only upon notification sent by tax authorities under an audit procedure. The initial wording of the regulations used to provide that such information should already be presented in the declaration.

This declaration, the lawyers explain, must be presented through the Coleta Nacional, which is accessible in the e-CAC system of the BFRS. The layout of the information to be presented follows the criteria established by Executive Declaratory Act COPES No. 2/19.


By the last day of the month following the one when the transactions occurred, taxpayers are required to submit the information regulated by Normative Instruction No. 1,888/19. The tax obligation is due on a monthly basis.

Exchanges are also required to inform, annually, the balance of fiduciary currencies and cryptocurrencies held on December 31 by each client, as well as the obtention cost of the cryptocurrencies.

Not submitting the declaration, or submitting it with incomplete or inaccurate information, as well as the out-of-date submission are subject to penalties that may reach 3% of the total value of the transaction.

For those who invest in this type of business, the impact is considerable. Regulations require that any type of transaction that involves cryptocurrencies – and not only buy and sell operations – must be informed, such as swap/barter, donation, temporary assignment, and other types.


Whenever the transactions are carried out through exchanges in Brazil, the obligations of informing the BFRS lies on these companies, regardless of the amounts involved. But when the exchanges are established abroad, or when the transaction is not carried out with such type of intermediary, the declaration must be submitted by the individual or legal entity that performed it, if the total amount of monthly transactions is higher than BRL 30,000.00.