Tax Debts in Brazil: legal Solutions for Foreigners / Expats who owe Taxes to Brazilian Tax Authorities

Expats in Brazil

If you are a expats living, investing or doing business in Brazil and you have tax debts with the Brazilian tax authorities, there is an important message you need to hear: not everything is lost.

Brazil is still known as a very rigid country regarding tax collection. Brazilian tax authorities still focus almost exclusively on collections, fines, and litigation. But it has become clear that this approach generates thousands of lawsuits, high legal costs, and, in practice, very low tax recovery. This scenario has slowly started to change.

Why Brazil Is Changing Its Tax Collection Approach

The Brazilian government and Brazilian tax authorities realized something very simple: the more rigid the system is, the more court cases appear — and the less tax is actually collected.

Brazilian law does not allow the government to charge a person forever. There are legal time limits. One of the most important limits is called "prescrição" (this term is used in Portuguese law). When prescrição is reached, the tax debt must be extinguished. In simple words: the government can no longer charge that debt. The Brazilian government cannot demand payment "ad eterno" (forever).

Because of this reality, and guided by legal principles such as legal certainty and fairness, Brazil started to reform how it deals with tax debts.

The Turning Point: Tax Settlement (Transação Tributária Brasileira)

In 2019, Brazil introduced an important legal instrument through Provisional Measure No. 899/2019. This instrument created what we call tax settlement, in Portuguese transação tributária.

A tax settlement is a legal agreement between the taxpayer and the Brazilian tax authorities to resolve tax debts. Through this agreement, the taxpayer may obtain:

• Reduction of interest and penalties

• Long-term payment plans

• Suspension of tax collection while payments are made

• Possibility to offer assets as guarantees

• Restoration of tax compliance in Brazil

For foreigners/expats, this is extremely important because it allows regularization without endless litigation.

Types of Tax Settlement in Brazil

There are two main types of tax settlement in Brazil.

1. Individual Tax Settlement (article 46, of the law 13.988, 2020 + portaria 1.457, 2024): Debts starting at 10 million for taxes and 1 million for FGTS (Brazilian employee severance fund). This type can be requested at almost any time. It depends on an analysis of the taxpayer’s situation, financial capacity, and legal arguments.

2. Settlement by Adhesion (article 44, of the law 13.988, 2020 + portaria 6.757, 2022): In this case, the Brazilian tax authorities publish a public notice (called an edital). Typically for taxpayers with debts of lower amounts than the previous options. This notice explains:

• Who can apply

• Which debts are included

• The conditions and benefits

3 Simple Individual Tax Settlement (articles 64, 65, 66 of the law 13.988, 2020 + portaria 6.757, 2022): Debts starting at 1 million for taxes and 100 million for FGTS (Brazilian employee severance fund). Again, this type can be requested at almost any time. It depends on an analysis of the taxpayer’s situation, financial capacity, and legal arguments.

The taxpayer applies through an online system called Regularize. If the system confirms that the taxpayer meets the requirements, the agreement is accepted automatically. Payments begin, and the taxpayer becomes compliant as long as payments are made. If payments stop, the taxpayer becomes irregular again.

Important Warning: Not Every Debt Should Be Settled

This point is essential, especially for foreigners.

Sometimes, the Brazilian tax authorities can no longer legally charge the debt because the time limit has expired (prescrição). In these cases, signing a settlement may mean recognizing a debt that no longer be demanded by the government. That is why a legal analysis is crucial before accepting any agreement.

In some situations, the correct solution is not a settlement, but the extinction of the debt.

Who Charges the Debt: Understanding the Brazilian System

Foreigners/expats in Brazil often do not understand how tax collection works in Brazil. There is a clear step-by-step process.

1. First step: The debt starts with the Receita Federal. This is the main Brazilian tax authority responsible for federal taxes.

2. Second step: If the debt is not resolved, after around 90 days, there is an administrative rule that sends this debt to another authority.

3. Third step: The debt is transferred to the PGFN, which is the institution formed by public lawyers who represent the Brazilian government in tax matters. At this stage, the debt becomes active debt (dívida ativa).

Why Negotiation Is Better at the PGFN Level

In practice, negotiations directly with the Receita Federal usually involve high interest and high penalties. For this reason, many law firms — including ours — avoid settlements at this stage.

At the PGFN level, tax settlements are more flexible and legally structured. This is where transação tributária normally happens.

Other Legal Tools Available in Brazil

Brazil has also introduced other modern legal solutions to resolve tax disputes.

• Tax Arbitration (Law No. 2.791/2022): Allows certain tax conflicts to be resolved outside traditional courts.

• Procedural Legal Agreement (Portaria No. 742/2018): A formal agreement between the taxpayer and Brazilian tax authorities to define how a tax process will proceed.

• Debt Forgiveness Mechanisms under the Brazilian Tax Code (in practice, this is very difficult to hapenn, but its exist in Brazilian tax law.:

  • Anistia: forgiveness of penalties and interest

  • Remissão: forgiveness of the principal tax debt (rare and depends on specific laws)

    
    

Foreigners in Brazil

If you are a expats living or investing in Brazil and you owe taxes to the Brazilian tax authorities, there are legal and safe solutions. Depending on your case, it may be possible to:

• Reduce the tax debt

• Eliminate the tax debt

• Negotiate the tax debt through a settlement

• Become compliant again with Brazilian tax authorities

With proper legal guidance and a clear analysis of your situation, you can resolve your tax issues and move forward without constant fear of fines, lawsuits, or bureaucratic stress. Tax compliance is part of life in society — but it does not need to be a permanent burden.

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📞 Contact: taxforexpats@gmail.com

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📌 This article is for informational purposes only and does not replace personalized legal advice. Each case must be analyzed individually based on the person’s country of residence and type of income. Reproduction or distribution of this article, in whole or in part, is permitted only with proper credit to the author. This material must mention Clivanir Cassiano de Oliveira, OAB nº 34.395B, as the original author.