On September 29, 2023, the Consultation Solution COSIT No. 217/2023 was published, in which the Secretariat of the Federal Revenue of Brazil (RFB) clarified that a company operating an electronic platform for trading non-fungible tokens (NFTs) representing a specific physical property is not obligated to report operations involving such NFTs in the Cryptocurrency Declaration, as per the Normative Instruction RFB No. 1,888/2019 ("NI 1,888"), nor in the Real Estate Activity Information Declaration (DIMOB) as per the Normative Instruction RFB No. 1,115/2010 ("NI 1,115").

NI 1,888 established the obligation to provide information regarding operations carried out with cryptocurrencies to the RFB. This norm defines: (i) cryptocurrency as "the digital representation of value denominated in its own unit of account, whose price can be expressed in local or foreign sovereign currency, electronically transacted using encryption and distributed ledger technologies, which can be used as an investment, as means of transferring value, or accessing services, and which does not constitute fiat currencies and (ii) cryptocurrency exchange as a legal entity, even if non-financial, that offers services related to operations with cryptocurrencies, including intermediation, trading, or custody, and can accept any means of payment, including other cryptocurrencies.

However, since the publication of this norm, companies in the cryptocurrency sector have been debating whether, given the intrinsic characteristics and properties of NFTs, these digital assets fit into the concept of cryptocurrencies as defined by NI 1,888. This debate intensified after RFB expressed its understanding that NFTs defined as "tokens representing rights to digital or physical assets, such as collectibles, artworks, and real estate," should be reported in the Assets and Rights section of the Annual Individual Income Tax Return under a specific code (code 10) within the cryptocurrency group (group 8).

In this context, aiming to address doubts related to the obligation to comply with ancillary obligations, a taxpayer who operated a platform for NFTs submitted a tax query to RFB. In the case under analysis, transactions with NFTs took place on the digital platform he operated, where users could transfer ownership of NFTs entirely in a digital manner.

Considering the activities carried out, the taxpayer questioned the RFB (i) if it, as the platform operator, could be considered a Cryptocurrency Exchange; (ii) if, given the electronic trading of NFTs among platform users, it should report the transactions in the Cryptocurrency Declaration; and finally (iii) if it was still obliged to file the Real Estate Activity Information Declaration (DIMOB), given that formally, it did not engage in the negotiation of real estate transactions but only in the trading of digital assets representing real estate.

In the understanding of the RFB, the unitary and non-fungible NFT representing a specific physical property would not fit the concept of cryptocurrency since it lacks one of the typical properties necessary for its characterization as such, namely the "unit of account." This characteristic is present, for example, in other fungible cryptocurrencies that have their own unit of measurement and can be easily replaced by others of the same kind, quality, and quantity.

In this sense, through Consultation Solution COSIT No. 217, the RFB clarified that (a) the legal entity that provides services related to NFT operations representing a particular property is not required to provide information about transactions with this NFT in the cryptocurrency declaration, as it does not fit the concept of cryptocurrency as defined in NI 1,888; and (b) the legal entity that intermediates the sale of such NFT or only confirms the ownership of such NFT for the purpose of renting the property it represents and records these transactions is not obliged to submit the Real Estate Activity Information Declaration (DIMOB) for these activities due to the fact that such operation does not constitute the intermediation in the sale or rental of real estate but only of NFTs through the platform where interested parties finalize the transaction.

We have a specialized team in cryptocurrencies and are ready to assist with your demands.