With the rise of freelance and informal work in Brazil, many professionals are choosing to receive payments through PIX, the Central Bank's instant transfer platform. However, this practice can lead to several problems, especially related to income tax declarations and implications with the Federal Revenue Service.
Main Problems
Lack of Formal Registration: Many self-employed individuals do not formalize their activities, which implies a lack of registration in the National Registry of Legal Entities (CNPJ). This informality makes it difficult to prove income and obtain credit, in addition to harming future retirement. Without formal registration, the self-employed are left out of various opportunities and benefits offered to formal workers.
Risk of Fines and Penalties: The Brazilian Federal Revenue Service requires that all income be declared. Receiving payments solely through PIX (Brazil's instant payment system) without proper declaration can result in heavy fines and other penalties. According to the Revenue Service, the fines can range from 20% to 150% of the undeclared amount, representing a significant financial burden for self-employed workers.
Limitation of Social Security Benefits: The lack of regular contributions to the INSS (Brazilian National Institute of Social Security) prevents workers from accessing benefits such as retirement, sick pay, and maternity leave. Informality, therefore, not only jeopardizes immediate financial security but also compromises the future social security of these professionals.
According to the IBGE (Brazilian Institute of Geography and Statistics), in 2023, approximately 39.3 million people worked independently or informally, representing about 41.1% of the country's workforce. This group faces significant challenges in formalizing their activities and complying with tax requirements, further aggravating their financial and social security situation.
Patrícia Bastazini, a specialist accountant at Bastazini Contabilidade, warns about the risks of this practice: “Receiving payments only through PIX without making the proper declaration to the Federal Revenue Service is extremely risky. Many self-employed individuals are unaware of the legal and tax implications, which can result in serious problems in the future. It is essential that these professionals seek guidance to regularize their situation and avoid complications.”
She further adds that regularization not only avoids problems with the Internal Revenue Service, but also opens doors to social security benefits and better credit conditions: “Formalization and the correct declaration of income allow self-employed workers to access a range of benefits, such as easier access to credit and contributions to retirement. It is an investment in the security and future of the professional themselves.”
Paths to Regularization
To avoid the aforementioned problems, freelancers should follow some basic guidelines:
Formalization as a MEI (Individual Microentrepreneur): The MEI offers a simplified form of formalization, with low cost and access to social security benefits. This modality allows self-employed individuals to formalize their business quickly and with a reduced tax burden.
Maintaining Income Records: It is essential to keep detailed records of income received and expenses related to professional activity. This record is fundamental for the correct filing of taxes and for the financial management of the business.
Seeking Professional Guidance: Accountants and accounting specialists can provide accurate guidance on how to proceed with income tax returns and other tax obligations. Professional guidance can prevent errors and ensure that all obligations are met correctly.
Regular Contributions to INSS (BrazilianSocial Security Institute): Ensuring regular contributions to INSS is crucial for accessing social security benefits. These contributions guarantee social protection for self-employed workers.
“The practice of receiving payments exclusively through PIX may seem like a practical short-term solution, but the associated risks and complications can be significant. Formalization and compliance with tax requirements not only prevent problems with the Internal Revenue Service, but also provide greater security and benefits to self-employed workers. It is essential that these professionals seek guidance to regularize their situation and ensure a more stable and secure future,” explains Patrícia.
In times of economic uncertainty, formalization and proper tax management become even more important. Self-employed workers should be aware of the risks and seek ways to formalize their activities, thus ensuring a more secure and balanced financial life.
