Taxes in Brazil are not usually straightforward to understand and even more so to declare. Unfortunately, this also applies to gains obtained through IQ Option, as there is no guidance from a government agency to assist you with this.
Therefore, we share our experience on the subject.
The Brazilian tax system is not known for being simple and easy to understand. For those who make money on IQ Option, this difficulty may also exist because there are no explicit rules in the legislation explaining how the payment of income tax generated through IQ Option or another binary options broker works.
However, according to Brazilian legislation, any capital gain is subject to taxation, and to avoid problems with the tax authorities, it is important to be aware of the most recommended ways to declare gains on IQ Option in your income tax return.
How does income tax work in Brazil?
Income Tax is a tax levied once a year by the Brazilian federal government (usually in April). The rules are very comprehensive, and for this reason, we will focus only on the main ones.
The first thing you should know is that filing an income tax return is not mandatory if you do not meet some minimum criteria. However, you should pay close attention to these criteria because, on the other hand, evading income tax is considered a crime in Brazil.
Below, we will list some of the main rules only. Therefore, if your goal is guidance on filing your income tax return, we recommend consulting an accountant you trust. In this article, we will outline general guidelines on how income tax works for IQ Option and the earnings derived from it.
How to declare income tax for 2022 Binary Options?
Main criteria for declaring income tax. As mentioned earlier, if you meet any of the three requirements below, you need to declare income tax:
- Received taxable income (such as salaries and rents) with an annual sum exceeding R$ 28,559.70.
- Received tax-exempt, non-taxable, or source-exclusive taxed income (for example: labor indemnities, savings accounts, or donations) in an amount exceeding R$ 40,000.
- Engaged in operations on stock exchanges, commodity exchanges, futures, and similar activities (investments).
Do I need to declare income tax with IQ Option?
The first question arises from item number 3 listed above, which mentions that anyone who has carried out operations in stock exchanges and the like needs to declare income tax, suggesting the need for anyone who trades financial assets on IQ Option to declare income tax.
However, as IQ Option is not regulated by CVM, the regulatory body of the Brazilian financial market, it can be interpreted that operations carried out on it do not generate the need to declare your gains in income tax.
But, as we mentioned earlier, income tax is a taxation on capital gains, and if you have made money, it may be necessary to declare and pay tax on this profit. Therefore, we will go into more depth on the issue of capital gains in IQ Option income tax.
How to declare Income Tax for Binary Options?
Firstly, it’s important to emphasize once again that there is no consensus regarding income tax declaration for IQ Option, as there is no specific guidance provided by Brazilian government agencies.
Therefore, we are sharing our experience and also what most experienced traders do.
One of the most common approaches for declaring income tax for IQ Option in Brazil is through foreign currency capital gains, which is quite feasible with binary options trading since IQ Option and other brokers in the market allow you to trade in Brazilian real while using assets priced in dollars or another foreign currency.
For this type of capital gain, the expected tax is 15% regardless of the profit earned. It is very important to have the values sent and received from IQ Option, as well as the exchange rates if you have conducted these operations in dollars or another foreign currency.
Carnê-leão
Another way to declare income tax on profits from IQ Option is through “Carnê-leão.” As mentioned earlier, there isn’t a single correct way to do this, so we’ll explain another method that some traders use to pay their taxes.
“Carnê-leão” is a mechanism for self-employed professionals to pay income tax, including for activities conducted outside the country, such as trading binary options. It imposes the obligation to pay tax starting from a monthly income of 1,903.99 BRL (7.5% tax rate), but this rate can increase to 27.50% for income above 4,664.68 BRL in a month.
While not as popular for declaring taxes on IQ Option profits, we couldn’t overlook mentioning it because it allows for the monthly declaration of profits with a progressive tax rate, which can be advantageous for smaller amounts.
Final considerations
As we have pointed out several times, this article does not aim to teach you how to declare income tax when withdrawing from IQ Option for two reasons: there is no specification from the Brazilian tax authorities for this case, and we are not accountants.
If you are just starting in this market, we recommend not worrying too much about this issue, as making a consistent profit is not easy. And if the results are starting to show, our recommendation is to consult an accountant you trust and explain to them how the binary options market works.
This way, the professional can help you declare income tax after withdrawing from IQ Option in the most appropriate way to avoid problems with the Brazilian tax authorities and focus on what is most important, which is the operational aspect.
Dessert
