Brazil's new regulations require the declaration of undisclosed Crypto Assets, with violators facing a 30% fine.

Source: Exame Original Title: New law encourages the regularization of undeclared cryptocurrencies and fines investors Original Link: Vice President Geraldo Alckmin (PSB) signed a bill last Friday (21st) that creates a Special Asset Update and Regulation System (Rearp). The program requires investors to declare cryptocurrencies that have not been reported to the Federal Revenue Service and pay fines.

Rearp allows for delayed declaration of various assets, including bank deposits, fund shares, insurance policies, debt certificates, pension funds, loan operations, various movable properties, real estate, vehicles, and “intangible assets”. The last category includes cryptocurrencies.

The inclusion of cryptocurrencies is based on the definition in the cryptocurrency legal framework of 2022. Investors have been required to declare their digital asset operations and profits for years, but are exempt from income tax if capital gains are below 35,000 reais.

The goal of Rearp is to encourage investors to standardize asset declarations. Therefore, investors can both update past declarations to include corrections of specific values and declare new assets that were omitted in previous years' declarations.

Fine Payment

In both cases, investors are required to pay the fines stipulated by law. The fines are divided into two parts, the first part is a 15% capital gains tax on the declared value of Rearp.

A second part of the fine will also be imposed, valued at an amount equal to the total amount of the income tax levied. In practice, investors need to pay a total fine equivalent to 30% of the cryptocurrency profits declared through Rearp.

The regulation sets a standardized deadline of 90 days. Therefore, the deadline will be extended to the end of February 2026. Reporting and paying fines will lead to the elimination of legal penalties for investors, who may have previously faced other legal sanctions.

The law specifically states: “In a regulated manner, if a taxpayer submits false declarations or documents related to the ownership and legal conditions of the reported movable property, immovable property, or rights, or false declarations or documents related to the proof of the market value corresponding to the declared asset value, then that taxpayer will be excluded from Rearp.”