Another tax question鈥�

Kurterino · 2025-08-03T16:30:58+02:00

Explore tax implications for Brazil and Switzerland pensions, including filing strategies and tax treaties, tailored for expats navigating complex regulations.

Kurterino Serial expat

Member since 28 August 2011

KurterinoSerial expatYesterday 14:30:58

424

I had a little discussion with my accountant on Friday, and the gist of it is that he recommended to not file taxes at all, so I wanted to see how some of you guys are handling the tax situation.

I鈥檓 getting a monthly pension from my home country, and the tax treaty between Brazil and Switzerland very clearly states that pensions are ONLY taxable in the country which is paying said pension. So in my case, I only have to pay taxes in Switzerland, which I do and have corresponding documents to prove it, if necessary. However, my accountant interpreted the treaty differently: he thinks that I鈥檓 allowed to deduct the taxes that I pay in Switzerland from the taxes I have to pay here. I鈥檓 99.9 % sure that he鈥檚 wrong: first, the treaty explicitly states that pensions are ONLY taxed in the country which pays the pensions, and second, if the accountant was right, the treaty would be close to useless, since the taxes are so much higher in Brazil that it would hardly have any effect at all: an income that results in the lowest possible tax bracket in Switzerland would still be in the highest bracket in Brazil (27.5%), hence the taxes owed in Brazil would be like 12 times higher than the taxes in Switzerland, and I honestly couldn鈥檛 afford to pay them. And you would have to be a millionaire (in Swiss money) to be able to afford Brazilian taxes and still be able to travel, for example.

Given this situation, he recommended to not file at all, and to hire a lawyer if it ever came to that (eg if the Receita Federal should ask questions).

While I was in his office, this seemed the best possible solution to me too, but after thinking about it some more, I changed my mind: i think I should probably still file , but I would have to declare 0 taxable income, since my pension falls under this treaty. Because the tax application doesn鈥檛 allow to enter an income with the caveat that it鈥檚 not taxable (apparently), so if I declared it, I would definitely be taxed on it.

What do you think?

abthree Brazil Expert

Member since 28 December 2017

abthreeBrazil ExpertYesterday 19:19:50

6227

08/03/25 @Kurterino.聽 We've both been around here a long time, so I'm sure you've seen my two basic postulates for dealing with Brazilian officialdom before:

Always answer every question asked truthfully.
Answer the question asked and then stop talking, unless you're positive that any information you volunteer will help your case, and importantly, will not inspire additional questions.

The Receita Federal version of that is:

Always pay everything you owe, pay it promptly, and pay no more than you owe.
Don't do anything that will require further explanation if you can avoid it.

As you can imagine applying these rules, in your place I would follow your accountant's advice.聽 Your reading of the tax treaty makes sense to me and your accountant's does not.聽 Moreover, I have no doubt that submitting a zero tax return (I'm not even sure that's possible in their system) would make somebody ask, "What's this all about?"聽 And then the fun would really begin.

When you return fulltime, or when you reach the point where you don't have to renew your Authorization for Residency every two years (whichever comes first), review the whole subject again with your accountant.聽 Meanwhile, keep good records and don't overthink things, if you're able to do that.