NFTs and cryptocurrencies must be declared on Income Tax. NFTs, non-fungible tokens, are unique digital items authenticated on the blockchain. Even game items like Axie Infinity and other blockchain games must be declared.
“Because it is a new financial product, few people know that the NFT is a declarable investment and that it follows the rules of the Federal Revenue like any other”, said Daniel de Paula, tax consultant for the IOB, to the Diário do Comércio de São Paulo.
Crypto assets must be informed in the “Assets and Rights” form, in the corresponding line, as long as they are within the mandatory definitions provided by the Federal Revenue, as described below.
Where to declare in Income Tax
In the “Assets and Rights” form, each group and code indicates a different option and the respective balance on a given date. For example, in group 04 – Applications and Investments there is the code “Code 01” for the Savings Account and in group 07 – Funds, there is the “Code 03” for Real Estate Investment Funds.
To inform the possession of NFTs, cryptocurrencies and other cryptoassets, on the IR Declaration platform, the investor must select the Cryptoactives group in the form. Then, enter the most appropriate code for the type of digital asset to be declared.
The code created for the declaration of NFTs is 10, within the group 08 – Cryptoactives. In the NFT code, all crypto assets defined in this way must be informed, not just digital and collectible artworks. Thus, possession of blockchain game NFTs must also be declared.
The Federal Revenue started greater control over cryptocurrency operations after the publication of Normative Instruction No. 1,888/2019, which stipulates greater monitoring when the monthly value of operations exceeds BRL 30,000.
Sale of NFTs can be taxed when over BRL 35,000
For Income Tax taxation purposes, as with the sale of other types of assets, gains obtained from the sale of NFTs, the total amount of which sold in the month exceeds R$ 35 thousand, are taxed.
Taxation will be as a capital gain, according to progressive rates established based on profit (the rate can vary between 15% for gains up to R$5 million and 22.5% for gains exceeding R$30 million), and the Income tax must be paid by the last business day of the month following the transaction, under revenue code 4600.
The exemption for sales up to BRL 35,000 applies to the set of crypto assets sold in the month, regardless of type (bitcoin, NFT, ethereum, litecoin, etc.).
In the declaration of assets and rights, the set of cryptocurrencies or other digital asset of the same type, whose acquisition value is equal to or greater than BRL 5,000, must be declared.
In the breakdown, it is necessary to inform the amount, name of the company where it is in custody and CNPJ, if applicable, or digital wallet model used, when carrying out own custody. Different types must constitute separate items.
Source: Sao Paulo Trade Journal