Brazil property tax guide for Belgian, French & Dutch owners

This is one of the questions we are asked most often, and also one of the most misunderstood: how much will the tax burden on a real estate investment in Alagoas actually be once you take into account not only Brazil, but also your country of tax residence?​ 

The short answer is that it depends on three stages (purchase, rental and resale) and on your country of residence. The final tax burden is almost never simply a matter of adding two tax rates together.

The Brazilian tax regime: the same for everyone

Regardless of your country of residence, Brazilian tax rules apply in the same way to a non-resident. This is the common starting point before taking into account the tax rules of your home country.

On purchase

There are two main costs:

• ITBI (Imposto de Transmissão de Bens Imóveis): a municipal property transfer tax paid by the buyer before the deed is signed. In Maceió, the rate is 3% of the property's value (with the market value or the municipality's assessed value being used, whichever is higher).
• Cartório fees (notary and land registry fees), which are payable in addition to ITBI: allow for approximately 1 to 3% of the property's value for these additional costs. 

In total, buyers in Maceió should generally budget between 4 and 6% of the property's value for all acquisition costs.

When renting out the property

Rental income received by a non-resident is subject to a 15% withholding tax on the gross amount, withheld in Brazil by the procurador (tax representative). This is a final, flat-rate tax: there are no deductible expenses and no tax-free allowance; the tax applies from the very first real of rental income. 

Legal basis: Article 763 of the Income Tax Regulations (RIR/2018), Law 9.779/1999.

On resale

The capital gain (sale price minus purchase price, without the reductions based on the holding period available to Brazilian residents) is taxed at 15% on capital gains up to R$5 million, followed by rates of 17.5% / 20% / 22.5% on higher amounts, according to progressive tax brackets. 

Non-residents are not entitled to the exemptions available to Brazilian residents, such as the exemption on the sale of a single property for less than R$440,000.

Every year, whether or not the property is rented out

IPTU (municipal property tax), for which the typical residential rate in Brazil ranges from 0.6% to 1% of the property's assessed value per year, depending on the municipality.

Belgium

Belgium has a tax treaty with Brazil, signed in 1972 and revised in 2002. For rental income, this makes a significant difference: under the mechanism applied by the Belgian Federal Public Service Finance for treaty countries, foreign real estate income is exempt in Belgium, subject to a progression reserve. In practice, this means that you declare the income (the equivalent of the cadastral income for your Brazilian property), but it is not taxed a second time in Belgium. It is, however, taken into account when determining the tax rate applicable to your other Belgian income. It is therefore not completely tax-free, but neither does it result in double taxation.

This mechanism applies to pure real estate income. If your property is rented out furnished, as is the case with most Airbnb rentals, part of the rental income falls into a different tax category: it is not the entire rent that is treated as movable income, but only the portion corresponding specifically to the use of the furniture. By default, this movable component is deemed to represent 40% of the rent. A flat-rate deduction of 50% is then applied, and the remaining amount is taxed at a separate rate of 30%.

Unlike real estate income, this component is in principle not covered by the treaty exemption. Tax treaties cover income from immovable property, not income derived from movable property. This portion therefore remains taxable in Belgium, regardless of any tax already paid on it in Brazil.

For example, on monthly rental income of €1,000, €400 falls under the movable-income regime. After the 50% flat-rate deduction, the taxable base is €200. At a tax rate of 30%, this results in €60 of Belgian tax on this component of the rental income alone.

Since 1 January 2023, the European DAC7 Directive has required platforms such as Airbnb to automatically report income earned by their hosts to the tax authorities. In practice, the Belgian tax administration therefore already has this information when you file your tax return.

On resale, the general Belgian rule is as follows: within the framework of the normal management of private assets, a capital gain on a built property sold within five years of its acquisition is in principle taxed at 16.5% (Article 90 of the Belgian Income Tax Code of 1992). After five years, the gain is in principle no longer taxable. This rule applies equally to property held in Belgium and property held abroad. 

For a property located in Brazil, the difference arises from the Belgium-Brazil tax treaty: because the treaty gives Brazil the primary taxing right over real estate gains (just as it does for rental income), Belgium applies the same exemption mechanism with a progression reserve to the capital gain. In practice, this generally means that a Belgian tax resident does not pay the Belgian 16.5% a second time on a gain that has already been taxed in Brazil. However, the precise interaction between the Belgian category of "miscellaneous income" and the tax treaty remains a technical issue that should be confirmed by an accountant at the time of the sale, particularly if the property is sold within five years of acquisition.

France

France also has a tax treaty with Brazil, one of Brazil's oldest (signed in 1971 and in force since 1972), but the mechanism is more complex than a simple division where "each country applies its own rate".

For rental income and capital gains on real estate, the treaty (Articles 6 and 13) gives Brazil the primary taxing right, as the country where the property is located. However, the treaty does not remove France's own right to tax its residents on their worldwide income. Moreover, the mechanism used differs depending on whether the income is rental income or a capital gain. This is an important distinction that many simplified summaries get wrong.

For rental income (Article 6), the default mechanism under Article 22 §2(a) of the treaty applies: the income is exempt in France, subject to a progression reserve, following the same basic principle as in Belgium and the Netherlands. You declare the Brazilian-source real estate income. It is not taxed a second time in France, but it is taken into account when determining the tax rate applicable to your other income.

For a capital gain on resale (Article 13), the mechanism is different: Article 22 §2(c) of the treaty explicitly lists Articles 10, 11, 12, 13, 14, 16 and 17 as falling under the foreign tax credit mechanism rather than the exemption mechanism. This was confirmed word for word in a 2022 decision of the French Conseil d'État (No. 455943). France therefore applies its own rules for calculating the real estate capital gain (19% income tax + 17.2% social contributions, i.e. 36.2% before any holding-period allowances), and then grants a foreign tax credit equal to the tax actually paid in Brazil, subject to the limit of the corresponding French tax.

It is precisely this tax-credit mechanism that makes generic calculations dangerous. The Conseil d'État has in fact ruled on several disputes concerning the exact interpretation of this article, showing that even tax lawyers and practitioners do not always agree immediately on the final outcome. In practical terms, this means:

• The amount ultimately payable in France depends on the precise calculation of the capital gain under French rules (including the conversion from BRL to EUR using the correct exchange rates and dates) and on the amount of tax actually paid in Brazil.
• A calculation such as "you will pay 15% in Brazil + 36.2% in France" is almost always wrong: in reality, the final tax burden will generally fall somewhere between the two, but the exact amount depends on your individual circumstances.
• Holding-period allowances (6% per year after five years, leading to a full exemption from income tax after 22 years and from social contributions after 30 years) apply to the French calculation, but only once the five-year threshold has been exceeded.

For a French tax resident, each individual situation (holding period, exchange rate at the time of purchase and resale, deductible expenses) can materially affect the outcome. A generic calculation therefore has little practical value. We systematically recommend obtaining a personalised calculation from a tax adviser before selling the property.

The Netherlands

The Netherlands also has a tax treaty with Brazil, signed in 1990 and in force since 1991. It remains applicable today. A modernisation of the treaty is currently under negotiation, but has not yet been finalised.

The Dutch approach differs from the two previous countries: the Netherlands does not tax rental income as such. Foreign real estate falls under Box 3 (the tax regime for savings, investments and other assets). The value of the property on 1 January is used as the basis, rather than the actual rent received. A deemed return is then applied to that value (or, following recent developments in the Box 3 rules, the actual return where the taxpayer opts for that method).

Under the tax treaty with Brazil, the property qualifies for an exemption with a proportionality fraction (vrijstellingsmethode met evenredigheidsbreuk): you declare the value of the property, but the corresponding portion of Dutch tax is neutralised to prevent double taxation. In principle, this is broadly similar to the Belgian mechanism. However, the precise calculation is technical, particularly following the reform of Box 3 and the possibility of opting for taxation based on actual returns. It should therefore be checked with a Dutch accountant experienced in foreign real estate.

On resale, there is no separate Dutch capital gains tax: the Box 3 system taxes the ownership of assets from year to year, rather than the sale transaction itself. This is a fundamental structural difference compared with France and Belgium.

So, is it still worth buying property in Alagoas under the current tax rules?

The short answer: taxation is a real cost that needs to be included in the investment calculation, but it does not fundamentally change the investment equation if the underlying numbers are sound from the outset.

The main mistake to avoid is looking only at the potential capital gain on resale while ignoring the rental income generated in the meantime. A 25 to 30% increase in value over five years may look modest once you deduct ITBI, notary fees, Brazilian capital gains tax and the tax burden in your country of residence. 

But if the property has also generated rental income during that period, particularly in Maceió, where the tourism rental market is active, the calculation changes completely. A net rental yield of 5 to 7% per year for short-term rentals, or 6 to 6.5% for long-term rentals (figures we have analysed and documented in detail in our article on Airbnb profitability in Maceió)

In our view, this is the right way to assess a property investment in Alagoas today: not "how much will I make when I sell in five years?", but "how much will I receive in total, including net rental income after tax, plus the net capital gain after tax when I exit?". With property prices in Maceió having increased by around 6 to 8% per year in recent months (Índice FipeZAP), and a net rental yield of around 5 to 7%, the investment case remains favourable in most reasonable scenarios even after accounting for taxation at every stage. However, the final outcome depends directly on your country of tax residence and your personal circumstances.

About the author

Jason Aerts

Founder of Invest in Brazil

Jason Aerts is the founder of Invest in Brazil, a company specialized in assisting foreign investors in Brazil. Together with his wife, Nieilly Gomes, they help international clients with their real estate projects in northeastern Brazil: investments, visas, CPF registration, bank account opening, and rental management.

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