Individual Income Tax in Crypto Assets Exchange

Abstract

Bitcoin was created by Satoshi Nakamoto in 2008 using an innovative technology named blockchain and became the first cryptocurrency available in the market. This fact led to the advances of the crypto market onto the digital economy, emerging with other crypto currencies, such as Non-Fungible Tokens (NFTs) and token assets. This new category of investment bear such amount of value that was inevitable that its importance would become evident. Therefore, in 2019, the Brazilian Federal Revenue Office published the IN n. 1.888, imposing the taxpayer to declare the possession of crypto assets in their annual income tax declaration. Later, in December 20, 2021, a Cosit Query Solution n. 214, reiterated by Disit Query Solution n. 6.008 of May, 24, 2022, the Brazilian Federal Revenue Office clarified that crypto currencies exchange is taxed in the individual income tax based on capital gain. Thus, the legality of this tax should be considered questionable, because of the income and earning of any nature, which implies the existence of equity increase.