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Income Tax - IRPF

Income Tax (Imposto de Renda das Pessoas Físicas - IRPF)

Foreigners resident in Brazil (and all Brazilians as well) are subject to personal income tax - IRPF. This tax is a Union tax and payment is collected from the Federal Government at the source. In April, taxpayers must also declare their annual income.

In accordance with Brazilian legislation, a foreigner working in Brazil is considered resident if:
- On the date of arrival in Brazil the foreigner has a permanent visa;
- On the date of arrival in Brazil the foreigner has a temporary contract of employment with a Brazilian company;

Income tax is payable by any resident individual (pessoa física) who receives more than R$15,764.28 (as of January 2009) in the tax year from a salaried job, non-salaried job, pensions, rental activity or rural activity.

The tax is collected on all income, including wages, bonds, commissions, prizes and other forms of remuneration. Housing expenditures and student fees amongst others are classified as an indirect wage and are taxable.

How to submit an income tax declaration and pay income tax?

Personal income tax declarations can be made to the Ministry of Finance:
1. Online: A downloadable progamme (Programa Gerador da declaração) is made available by the Ministry of Finance that allows taxpayers to calculate their taxes, fill in the forms and file their returns; To declare income tax online: Click here (in Portuguese);
2. By filling in an Annual Adjustment Statement form at the post office. A small fee is payable by the taxpayer when declaring tax in this way.

Brazilian tax legislation allows deductions on the IRPF for the following paid expenses:

- Social security contributions paid to the National Institute of Social Security;
- Spousal maintenance payments;
- Dependents - deductions are available for dependents (including spouse, children, parents and others);
- Education expenses of both the tax filer and their dependents (limited to R$1,700 each year, as of January 2009);
- Some health expenses, including doctor, dentist and laboratory fees, psychologists, hospitals and x-ray examinations.

These expenditures should be recorded and deducted from declared taxable income when the annual adjustment is made.
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