Brazilian Taxation US citizen in Brazil - income tax,

I am a USA citizen presently living and working in Brazil and my company has
started paying taxes to the Brazilian government.  Yet as I read into the
Brazilian tax documents it says that I should be taxed as a resident and
upon my worldwide income.  This would mean declaring interest, stock gains,
etc.  Is there a tax treaty USA-Brazil and can Brazil verify my holdings or
gains other than the Brazil earned salary?  Thank you for responding.
david ingram replies
There is no doubt that if you are in Brazil for more than 183 days, you are
taxable on your world income.  As a US citizen, you are also taxable on your
world income no matter where you live.
You will have to calculate both returns and calculate the tax payable on
each income item.  You will then claim a foreign tax credit for the taxes
paid to Brazil on form 1116 (maybe two or three 1116's) of your US 1040.  If
you have been in Brazil for more than 330 out of 365 days or there for an
entire calendar year and have established a bone fide residence in Brazil,
the first $80,000 US of your Brazilian earnings are exempt from US taxation
by filing form 2555.  The $80,000 can be significantly higher if you claim
the housing amount as well.
If you have the Brazilian return prepared locally, I am quite happy to look
after the US side for you.  I have access to two Portuguese speaking
accountants to look after the translation. We actually prepare a couple of
Brazil / US  and Portugal / US / Canada returns a year now and one of my 30
year tax associates is married to a Brazilian.
Your last question is almost scary.  The powers of taxing authorities in
these post 9/11 days is very scary.  I do not have enough US / Brazil
experience to talk from things I have seen personally but I was intimately
involved with a world money laundering conference (attended by the finance
people from 56 countries) and can tell you that the behind the scenes
information I was privy to means that I would never try and hide a penny
from either government.
There is really no such thing as a secret bank account any more no matter
what they try and tell you and that is pretty well proven by the recent
jailing of Jerome Schneider.
The following was put out by the Brazilian Embassy in Washington
Income Tax Obligations of Individuals
The information provided below is generic and is not a substitute for
consulting a tax attorney. The Brazilian Embassy in Washington does not
accept responsibility for imprecise or erroneous impressions that may arise
from reading the text that follows.
Individuals Subject to Double Taxation in Brazil and the United States
Brazilian tax legislation provides that taxes may be levied on income and
capital gains received by individuals residing in Brazil from sources
abroad, as well as income and capital gains received in Brazil by
individuals residing abroad (Instrução Normativa SRF no. 73/98, of June 23,
In the case of double taxation; that is, when individuals are subject to
income tax obligations in Brazil as well as in the United States, Brazilian
tax legislation provides that double taxation may be avoided:
a) in accordance with provisions of international agreements, treaties or
conventions against double taxation, signed by Brazil, or
b) pursuant to reciprocal tax treatment legislation (Instrução Normativa SRF
no. 73/98, art. 1, § 2).
At this time there is no double taxation agreement, treaty or convention
between Brazil and the United States. However, there is reciprocal tax
treatment between Brazil and the United States.
The tax legislation of the United States provides for reciprocal tax
treatment between the United States and several countries, including Brazil.
Article 901 of the U.S. Internal Revenue Code provides foreign tax credit
with respect to taxes paid to foreign governments.
Pursuant to applicable Brazilian legislation, proof of reciprocity of tax
treatment may be submitted in the following manner:
By presenting copies of the applicable U.S. tax law published by the United
States Government Printing Office, or the applicable foreign legislation
published by the official government gazette of the country where the income
was received, duly authenticated by a Brazil diplomatic or consular post, or
By presenting an affidavit by a Brazilian diplomatic or consular post
attesting to the existence of tax treatment reciprocity between Brazil and
the United States.
Thus, the taxpayer is allowed to prove the existence of reciprocity of tax
treatment between Brazil and the United States, in order to apply the
foreign tax credit corresponding to the amount already paid as income tax to
the United States government, to the applicable tax rate owed to the
government of Brazil, deducting that amount from the total amount owed to
the government of Brazil (Instrução Normativa SRF no. 73/98, art. 1, § 2).
Pursuant to a recent amendment to Brazilian tax legislation, an individual
who resides in Brazil but leaves the country permanently during the calendar
year, must submit, at the time that he or she requests a Negative
Certificate of Federal Tax Debts and Assessments, a Certificate of Permanent
Departure from Brazil relative to the period between January 1 and that
date, as well as the ones relative to the previous calendar years, if
mandatory and not submitted (Instrução Normativa SRF n. 167/99. Art. 9).
Jurisdiction: District of Columbia, Kentucky, Ohio, Maryland, Virginia and
West Virginia
Open to public: 8:00 a.m. to 1:00 p.m.
Monday through Friday, except holidays
Consular Service
3009 Whitehaven Street, N.W.
Washington, D.C. 20008
Phone: (202) 238-2828
Fax: (202) 238-2818
e-mail: consular at
Answers to this and other similar  questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee Wealth
Management and I, David Ingram  host a LIVE talk show called "ITS YOUR
Those outside of the Lower Mainland will be able to listen on the internet
at <>
Local calls are taken at (604) 280-0600 and Long Distance calls (BC only)
are taken at 1( 866) 778-0600
Callers to the show are invited to attend free seminars on financial
planning with such specialities as deductible mortgage interest. They are
held at Fred Snyder's Office at 1764 West 7th in Vancouver - (604) 731-8900
for more information.
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321 Fax (604) 980-0325
Email to taxman at <mailto:taxman at> <>
Disclaimer:  This question has been answered without detailed information or
consultation and is to be regarded only as general comment.   Nothing in
this message is or should be construed as advice in any particular
circumstances. No contract exists between the reader and the author and any
and all non-contractual duties are expressly denied. All readers should
obtain formal advice from a competent and appropriately qualified legal
practitioner or tax specialist in connection with personal or business
affairs such as at <> . If you forward
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Be ALERT,  the world needs more "lerts"
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