How to declare income tax on investments?

by Alex Musk

If you have a subject that generates doubts, you can be sure that it is knowing how to declare income tax on investments. Every year it’s the same thing, and that’s why you let the accountant take care of that responsibility.

However, this topic is not a mystery. It is possible to correctly declare your applications and avoid getting caught in the fine mesh of the IRS. Have no idea how to do this? Do not worry!

This post will explain the main aspects of the income tax return on securities investments. For this, we will address the following aspects:

  • how taxation works;
  • which applications must be declared;
  • what is needed to avoid risks in this process;
  • what is the risk of falling into the fine mesh.

So, how about knowing all these details? Just keep reading!

How does investment tax work?

Investments are an appropriate way to secure your financial future , mainly because they are calculated using compound interest . The doubt begins at the moment of making the IR declaration on them.

This process should always refer to applications made in the immediately preceding year — and you probably already know that. However, it is very likely that you do not understand how taxation works.

It is variable, because each type of investment has different charges. In addition, another relevant aspect is the moment at which taxation is levied. It can be in the tax collection, which usually occurs in the redemption or IR declaration.

In the first case, the investor does not always need to act, because several applications are exempt from IR and others automatically collect the tax. Even so, there are situations where it is necessary to take some action, which can lead to incorrect payment and even the imposition of fines.

In the second situation, all investments made must be declared and the gains (earned income) and balance (invested amount) must be detailed. This procedure is easy to do, but it differs depending on your investments.

It is important to point out that the wrong declaration can make you pay more taxes than necessary, suffer fines or fall into the fine mesh, which means that you have become the target of individual inspection.

To avoid these negative situations, see below the form of taxation for different types of investments:

Savings

This application is tax-exempt.

Bank Deposit Certificate (CDB)

This modality has the incidence of fixed income taxation rules. The rate varies according to the time of application. Look:

  • up to 180 days: rate of 22.5%;
  • from 181 to 360 days: 20% rate;
  • 361 to 720 days: rate of 17.5%;
  • over 720 days: 15% rate.

The discount is made only when the amount is redeemed and the collection is automatic. That is, you do not need to do anything, just declare the investment, because you already receive the net amount.

Direct Treasure

These securities are also subject to the application of rates according to fixed income, ranging from 22.5% to 15%. Income tax is levied on semi-annual coupon payments, maturity or sale of securities, and is automatically collected.

debentures

This long-term investment is also taxed according to fixed income rules. The difference is that the Income Tax is levied only in cases of coupon payments, maturities or sale of securities. The discount is made automatically.

Mortgage Letters of Credit (LCI), Agribusiness (LCA) and Mortgage Letters (LH)

These applications are tax-exempt. Therefore, you only need to make the declaration.

Certificate of Real Estate Receivables (CRI) and Agribusiness Receivables (CRA)

Investments are exempt from IR.

investment funds

The taxation of these applications varies according to their classification:

short term funds

This is a more difficult mod to find. Only some options of DI referenced funds or that contain the description “short term” fall into this category.

Income is taxed at 22.5% for redemption within 6 months. The remainder suffers the incidence of 20%. This fund also has the so-called come-quotas, which consists of the payment of 20% income tax on income in the months of May and November.

long term funds

This is the most common category. The advantage is that there are lower rates than short-term ones. The reduction reaches 15% of the yield for investments with more than 2 years. Therefore, it is a taxation similar to that of fixed income.

Come-quotas also apply to this modality, but the percentage is also reduced: 15% of the profitability obtained.

equity funds

This classification covers all equity funds and some exceptions to the multimarket modality. Taxation is simplified and the most advantageous, because the IR is only levied at the time of withdrawal. The rate is always 15% on top of income.

Keep in mind that you don’t need to know all the taxing details on the funds. The important thing is to understand which rates apply to profits when choosing the most suitable fund.

In the case of traditional funds, the IR is collected at source, which means that you receive the net amount. So, all you need to do is make the declaration.

Actions

In this case, taxation has several specific characteristics. The main details are as follows:

  • profits from the sale of shares are taxed at 15%;
  • dividends are tax-exempt;
  • interest on equity (JCP) has a rate of 15% and is collected at source;
  • sales of up to R$20,000 are tax-exempt;
  • the investor must calculate the IR on top of the profit from sales carried out in the previous month. Payment is made by Federal Revenue Collection Document (DARF) within the last day of the following month;
  • fees and brokerage costs may be deducted from the calculation of loss or profit;
  • the losses obtained in one month can be compensated with the gains of later months, in the case of the IR;
  • sales transactions withhold tax of 0.005%. The charge is made for each activity in this category, but can be offset;
  • day traders (trades that start and end on the same day) are counted separately. The withholding income tax is 1% on profit. Income is taxed at 20%. The losses obtained in these activities are only offset by profits in these same transactions;
  • Exchange Traded funds (ETF, also called index fund, for example, BOVA11, PIBB11, among others) and real estate funds have peculiarities and do not always follow the same rules.

For all the complexity of this type of investment, it is also necessary to consider the calculation of profits. You must calculate the average share price in the purchase process, including costs. If there was already an investment in that specific category, you need to account for the weighted average price of each unit.

Evaluate the investments that enter the “Exclusive taxation” form

Funds, CDBs and Bank Deposit Receipts (RDB) must be highlighted in the “Income subject to exclusive/definitive taxation” form using code 6. Again, it is necessary to select who made the investment and have a record for each of them if it was carried out for more than one person.

The procedure is similar to the previous one. In the “value” field, it is necessary to detail the total net income according to the bank’s report. If this information is not included in the document, it is necessary to take the “gross income” and the “withheld tax” and do the math.

In the case of FII, the income must be transferred in the “Exempt income” form, more precisely in line “26 – Others”. Returns with possible sales of shares must be detailed in “Variable income” in the “Operations with real estate investment funds” sheet.

Inform all investments in the “Assets and rights” sheet

The code used must match the application being executed. Look:

  • savings : code 41;
  • CDBs, RDBs, LCIs, LCAs and Direct Treasury: 45;
  • short-term investment funds: 71;
  • long-term investment funds and Credit Law Funds (FDIC): 72;
  • FII: 73;
  • Equity (FI), Equity Investment (FIP), Emerging Companies and Index Funds: 74;
  • other types of funds: 79.

Each investment requires a token. If you have the same applications (for example: two CDBs) in different banks/brokers, it is also necessary to do them separately.

In addition, it is necessary to describe the type of investment carried out and the name of the fund, if necessary. Specify the brokerage, bank or fund manager with the CNPJ and in the balances field in the two previous years, enter the amounts presented in the income report passed on by the financial institution.

Is there any risk of falling into the fine mesh?

The risk of investing goes beyond the simple possibility of losing money. At the time of the declaration, it is possible that you fall into the fine mesh, which means that the IRS will do a detailed analysis of the values ​​and declarations to identify potential errors. If any problems are detected, you will be fined.

In general, the main slips that make a person fall into the fine mesh are:

  • enter amounts incorrectly or with more than two decimals;
  • fail to inform the CNPJ of the paying sources;
  • failing to include all taxable income, forgetting, for example, private pension, retirement or rents received;
  • declare amounts that differ from what was reported by the paying source;
  • erroneously inform the income of private pension plans and Programmed Retirement Funds (Fapi).

In addition, the fact that investments need to be declared in different ways in the Federal Revenue Service can cause confusion. There are still some tips that help to avoid the fine mesh:

  • enter the savings balance whenever the amount exceeds R$ 140. If you have less than that, the information is optional;
  • inform the shares when the amount is above R$ 1,000. Please note that the bank forwards you a brokerage invoice whenever you buy a share. From this report, you can launch actions as specified above;
  • declare investment funds whose balance is greater than R$140;
  • transfer the CDB amounts when the balance is above R$140.

Apart from this information, remember that, in the case of private pension plans, there are different rules:

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