LEGAL ARTICLE The Declaration of Definitive Departure from the Country – For a layman
Title: The Declaration of Definitive Departure from the Country – For layman.
Subtitle: The least you need to know.
Abstract: Permanent and temporary nature of leaving the Country. What is the definitive statement of
departure of the Country and who needs to do it? Potential consequences of the definitive withdrawal
from the Country. An analysis of the Normative Instruction number 208 of 2002.
Keywords: Permanent departure from the Country. Permanent character. Temporary character. Nonresident. Income tax.
Like me, who currently lives in Canada, many Brazilians have left Brazil temporarily for study or
work purposes or permanently for immigration purposes. Regardless of your reasons for leaving Brazil,
there are some things you need to understand to avoid problems with the Federal Revenue Service of
Brazil or the Country where you are residing.
Every year this issue arises among groups of Brazilians living abroad. The subject is controversial
and always raises many doubts. Rightly so, as Brazilian legislation is confusing, the main legal text that
regulates the issue is not clear, there are several normative instruments on the subject. The public agency
responsible for this matter, the Federal Revenue Service of Brazil, unfortunately, is also not consistent in
providing information or finding solutions to the problems presented.
Putting aside the legal complications and going straight to the point, what Brazilians who are
leaving the Country or who have already left need to know is: after a maximum of 12 (twelve) months
after leaving Brazil, you will already be considered a non-tax resident under the terms of the law. It does
not matter whether you leave permanently or temporarily, from the day after you complete twelve
consecutive months of absence, you will be considered a non-tax resident. As an immediate consequence,
you will have an obligation to do the Communication of Definitive Departure from the Country (CDDC)
according to art. 11-A and then the Declaration of Definitive Departure from the Country (DDDC) pursuant
to art. 9 and art. 11, respectively, these being ancillary obligations for all non-residents.
Our understanding is that the fact of considering oneself a non-resident in Brazil occurs
automatically, either at the time of permanent departure with presenting the CDDC or after 12 months
of temporary absence or of permanent departure without presenting the CDDC. However, in the eyes of
the Internal Revenue Service, you are still a resident of the Country, as the agency has not yet become
aware of your non-resident status. That is why the law requires the individual to file the communication
and the declaration of definitive departure after becoming a non-resident, which occurs as explained
above.
As a matter of fact, the Federal Revenue Service can exchange information with financial
institutions, the Central Bank and the Federal Police and discover that you have been abroad for more
than 12 consecutive months and have not yet filed a definitive departure declaration, and from then on,
collect taxes from you as a non-resident. We've even seen cases like this happening here in Canada
however, it's something unusual.
Once again, trying to simplify this matter, let's go straight to article 3 of IN 208/02, which
stipulates:
Art. 3 Is considered to be a non-resident of Brazil, an individual:
I - who do not reside in Brazil on a permanent basis and do not fit the hypotheses provided for
in art. 2nd;
II - who permanently withdraws from the national territory, on the date of departure, subject
to the provisions of item V of art. 2nd;
III - who, as a non-resident, enters Brazil to provide services as an employee of a foreign
government agency located in the Country, subject to the provisions of item IV of art. 2nd;
IV - who enters Brazil with a temporary visa:
a) and remain for up to 183 days, consecutive or not, in a period of up to twelve months;
b) up to the day prior to obtaining a permanent visa or employment relationship, if it occurs
before completing 184 days, consecutive or not, of stay in Brazil, within a period of up to twelve
months;
V - who are absent from Brazil on a temporary basis, from the day following that on which he
completes twelve consecutive months of absence.
§ 1 For the purposes of the provisions of item IV, "a", of the caput, if, within a period of twelve
months, the individual does not complete 184 days, consecutive or not, of stay in Brazil, a new
period of up to twelve months will be counted from the date of entry following the one on
which the previous count started.
§ 2 The non-resident natural person who receives income from a source located in Brazil must
communicate this condition to the paying source, in writing, in order for the income tax to be
withheld, subject to the provisions of arts. 35 to 45.
We draw your attention to items I, II and V, in summary, we can understand that will be
considered non-resident an individual who: 1. does not reside permanently in Brazil; 2. who has left the
Country permanently; 3. who has left on a temporary basis, but who has already spent 12 consecutive
months outside Brazil.
In other words, once again, we emphasize that it does not matter whether you leave permanently
or temporarily, after staying 12 consecutive months outside of Brazil, you will be considered a nonresident for tax purposes.
At this moment, it is essential to make some observations. As for the non-resident, the normative
instruction does not distinguish between native or naturalized Brazilians, nor between Brazilians and
foreigners. At this point, the law is clear and refers broadly to the "natural person."
Second, it is important to clarify that civil residence can be different from tax residence. A civil
residence is where you live, where you receive mails and can be summoned by the court. The tax residence
is where you must provide tax information and pay taxes. Thus, an individual can have a civil residency in
Canada, where he has studied English for 11 months, and be a tax resident in Brazil, where he declares
and pays income tax.
Having cleared up these basic premises, let's move on to the topic that, apparently, seems to be
the subjective part of the law. We refer to the expressions "permanent character" and "temporary
character." The word character, here, conveys an idea of subjectivity, of desire, something intrinsic to the
human will, and in fact, it is. Only individuals will be able to say if they are leaving the Country with plans
never to return or plans to return one day. This idea of subjectivism is strengthened by the text of item IV
of art. 2, which says that it is considered resident in Brazil, the natural person "IV - Brazilian who acquired
the status of a non-resident in Brazil and returned to the Country with definitive animus, on the date of
arrival." However, here the law refers to those who left the Country, ceased to be a resident, and now
return to become a tax resident again. In this case, this subjective factor becomes irrelevant, as the nature
of this wish will soon be tacitly or expressly determined, either by staying in the national territory for 184
consecutive days or not, or by the express manifestation of this will by the individual, as it is expressly
provided in article 4 of the IN 208/02.
Art. 4 From the moment the natural person acquires the status of resident or non-resident in
the Country, the previous status will only be returned when any of the hypotheses provided for
in arts. 2nd or 3rd, as the case may be.
We cannot confuse the animus of return with the character of departure. These are different
determining wills, and their observations bring opposite results. It is important to highlight that the
normative instruction, at all times, refers to leave the Country permanently and stay away from the
Country temporarily, however, as we have already exhausted above, after 12 months of residence outside
of Brazil the person will be considered by law as a non-tax resident and the ancillary and principal
obligations arising from this event must be fulfilled.
But how to differentiate between withdrawing "on a permanent basis" (art. 3, II) and going away
"on a temporary basis"?
We understand that this is a matter of proof and should only be discussed in the evidentiary
context in an eventual legal discussion. So, for example, if you leave the Country and declare that you are
leaving permanently, cut your ties and move to another country where you start working and create new
ties, you probably left Brazil permanently. On the other hand, if you move to another country, do not
communicate, intend to return, and maintain assets and other ties with the Country, you probably left on
a temporary basis. As explained above, we perceive a subjectivity in this issue, as those who left
permanently can change their minds and return to Brazil, becoming a resident again. Likewise, those who
left on a temporary basis may change their minds and make their absence permanent. Which in the end
it is irrelevant in the view of the objective criterion of a period of 12 consecutive months of absence from
the Country.
Having overcome these nebulous points, we now move on to practical legal questions. What
would be the implications of leaving the Country permanently or temporarily and becoming a nonresident. In order to understand this point, we need to analyze Articles 2 and 3 together with Articles 9,
11 and 11-A, and then we need to separate the accessory obligations from the primary obligations.
Here, the legal norm places the responsibility on the individual for the correct action to be taken,
as if the person leaves the Country permanently, that is, they already know that they will stay outside the
Country for more than 12 consecutive months, they must follow the stated in art. 9th and 11-A, I. On the
other hand, if you leave on a temporary basis, that is, with plans to return to Brazil in less than 12 months
but ended up staying away for more than 12 consecutive months, the person must comply with the stated
in art. 11 and 11-A, II.
Notice that the result is the same; in both cases the person becomes a non-resident, either when
he leaves on a permanent basis, from the moment he departs, or when leaving on a temporary basis after
12 consecutive months of absence. As a result, the person will have to do the Communication of Definitive
Departure from the Country by the last day of February of the following year and then the Declaration of
Definitive Departure from the Country by the last day of April of the following year. As it can be seen, the
dates and the obligation to communicate and declare are the same for both permanent and temporary
departures. What will differentiate one from the other is the start of the counting period. In the
permanent withdrawal, the period starts from the moment of leaving the Country, as that is the when the
person becomes a non-resident. In contrast, in the temporary departure, the period begins to run only
from the moment of characterization of the condition of non-resident, what is, after 12 consecutive
months of absence.
Returning to the practical subjects, the question is: What would be the implications in the citizen's
life? In an uncomplicated way, we can say that eventual problems could arise when the individual:
a) Leave the Country, becoming a non-tax resident and severing ties with the Country, resolve to
return to Brazil permanently. If you have not made the declaration of definitive departure, the Federal
Revenue Service may question the origin of the goods and amounts brought and may charge fines and
taxes due.
b) To leave the Country, becoming a non-tax resident and maintaining links with the Country,
having to pay income tax. If you have not made the declaration of definitive departure, the Federal
Revenue Service may question your income abroad and charge a fine and taxes due.
There are still many other consequences arising from the characterization of the non-resident tax
status, such as the impossibility of making certain types of investments, the need to change the type of
bank account, the change in the form of taxation of income generated in Brazil, etc. However, these
specific themes should be left for another time, otherwise we will miss the central point of this article,
which is the type of departure from the Country and the characterization of fiscal non-residence.
In conclusion, for the ordinary citizen, it is important to know that:
a) It is mandatory to inform and declare the definitive departure from Brazil when fulfilling the
condition of non-tax residents.
b) The fulfillment of the condition of non-tax resident occurs automatically under the terms of the
law (as explained), however, the citizen must inform the Revenue Service of their condition of non-tax
resident. This occurred at the time of the permanent departure from Brazil or after 12 consecutive months
of temporary absence.
c) Failure to comply with this obligation may lead to problems with the Revenue Service, such as
paying a fine and collecting taxes due. In this case, the tax will be charged because the Federal Revenue
Service understands that you are still a tax resident in Brazil and as such, need to pay income tax over
earnings generated in Brazil and abroad, even if you have already paid tax in the country where you
currently reside.
d) Even if the person does not do the communication and declaration of definitive departure from
the Country, the Federal Revenue Service may cross-check information and discover that you have been
absent from the Country for more than 12 consecutive months and start charging you fine and taxes,
being able also to withhold these amounts at the source if you have income earnings in Brazil, including
from rent or retirement.
If you are not sure how to proceed, seek a lawyer specialized in the matter.
For those interested in going deeper into the subject, we recommend as sources of research the
website of the Federal Revenue of Brazil, www.gov.br/receitafederal, and the Normative Instruction
number 208 of 2002, which revokes previous normative instructions without, however, interrupting their
normative force, which in turn has already been altered at least eight times by new normative instructions.
There are also several other legal bills such as executive orders, normative instructions, court decisions,
responses to requests for consultations with the Revenue Agency and even a handout of Questions and
Answers from the Ministry of Economy and the Federal Revenue Service that serves as a reference for
administrative decisions.
Sources:
1. Website of the Federal Revenue of Brazil
2. SRF Normative Instruction No. 208/2002.
3. Normative Opinion No. 3, of September 1, 1995.
4. Decree No. 3,000, dated 26.03.1999.
5. Decree No. 9,580, of 2018.
6. Questions and Answers – IRPF 2009 to 2021.