On May 7, 2019, Normative Instruction No. 1,888/2019 ("NI") was published in the Official Gazette. The NI establishes which entities and individuals must provide the Brazilian IRS with information on cryptocurrency transactions.

We summarize below the main obligations created by the NI, which will become effective as of August 1, 2019:

  • The information will be submitted through the National Collection System on the Brazilian IRS website ("e-CAC"), using a document to be made available within sixty (60) days from publication of the NI.

  • The following are required to provide information to the Brazilian IRS regarding cryptocurrency transactions: (i) the so-called Digital Currency Exchangers ("DCE"), domiciled in Brazil, and (ii) individuals and legal entities, resident and domiciled in Brazil, engaging in transactions with DCEs domiciled overseas or without the intermediation of a DCE if the monthly value of the transactions exceeds thirty thousand reais (BRL 30,000.00).

  • The information to be provided to the Brazilian IRS includes the type of operation and the amount of the cryptocurrency used, to ten decimal places; the transaction value in BRL; the address of the remittance and receipt wallet; and, if the DCE is domiciled overseas, the DCE’s name.

  • The first set of data must be filed in September 2019 for the month of August 2019. 

  • Besides the monthly information report, the DCEs must also provide, regarding each of their users, the following information on December 31 for each calendar year:   (i) the balance of fiduciary coins, in BRL; (ii) the balance of each cryptocurrency, in the unit of the respective cryptocurrency; and (iii) the acquisition cost of each type of cryptocurrency, in BRL. 

  • Penalties are imposed for late filing, non-compliance with ancillary obligations and inaccurate information, the latter being subject to amendment, which will exempt the party from fines if done before the IRS’s inspection.