Brazilian artists can lose 30 percent of their US streaming royalties to withholding tax, because Brazil has no income tax treaty with the United States.
Getting it back depends on a monthly Brazilian tax most self-releasing artists never file, and on a 2000 reciprocity ruling. For the smallest earners, it cannot come back at all.
Why a US stream is taxed at source
The IRS sources copyright royalties where the property is used. A play by a listener in the US is US-source income, wherever the artist lives.
Non-US persons pay a flat 30 percent on that income unless a treaty lowers it. Brazil is absent from the IRS list of US income tax treaties, last reviewed 3 January 2026. A 1967 convention signed in Rio was never ratified, per Carvalho Barros Advocacia.
DistroKid’s page on withholding for non-US residents says up to 30% of earnings may be withheld, reduced or eliminated where a treaty applies. TuneCore’s tax page applies the same treaty logic. A W-8BEN, the IRS form certifying foreign status, cannot claim a treaty rate that does not exist.
What Brazil taxes, and when
Carnê-leão means the compulsory monthly income tax a Brazilian resident pays on income from abroad or from other individuals. Under article 16 of Instrução Normativa SRF 208/2002, foreign income is taxed in the month it is received, whether or not you bring it into Brazil.
- The monthly progressive table in force that month applies, topping out at 27.5 percent.
- Payment is due by the last business day of the following month, per Receita Federal.
- Foreign amounts convert at the Central Bank’s dollar buying rate for the last business day of the first half of the previous month, not the rate your bank gave you.
The credit that makes it one tax, not two
The same article lets you offset foreign tax where there is reciprocity. Ato Declaratório SRF 28/2000 recognises reciprocity with the US for federal income tax only, not state or local tax.
The catch: the credit cannot exceed the Brazilian tax attributable to the foreign income, and any excess only carries forward to December and the annual return.
Worked example: R$11,000 in one month
- Gross payout R$11,000, half of it US-sourced. US withholding takes R$1,650.
- Carnê-leão on R$11,000 at 27.5 percent, less the R$908.73 table deduction: R$2,116.27.
- Claim the credit and you pay Receita R$466.27. Total tax: 19.2 percent.
- Skip it and you pay the full R$2,116.27 on top. Total tax: 34.2 percent.
Worked example: R$4,000 in one month
From January 2026, Lei 15.270/2025 zeroes tax on monthly income up to R$5,000, tapering out at R$7,350, and the same reduction applies to carnê-leão, per Portal Contábeis.
One side effect. If half of R$4,000 is US-sourced, R$600 is withheld and there is no Brazilian tax to credit it against. That is 15 percent of the month’s income, gone.
What to do with this
- Keep every Form 1042-S. It reports US-source income and tax withheld for foreign persons. DistroKid files one for non-US users whether or not tax was withheld, per CPA Christian Putnam. It is your proof for the credit.
- Ask your distributor three questions. Does it withhold, at what rate, and do statements split US-sourced earnings by month?
- File carnê-leão monthly. The credit is claimed there first.
- Under R$5,000 a month, price the 30 percent in. It is a cost, not a timing gap. Check it with a contador.
- Remember what the credit rests on. 2022 US foreign tax credit rules briefly questioned crediting Brazilian tax, the premise of the ruling, until IRS Notices 2023-55 and 2023-80 restored the old treatment, per Carvalho Barros.
The stakes are rising. Brazilian artists generated about R$2 billion in Spotify royalties in 2025, up 24 percent. Portuguese was the fastest-growing language among those generating over US$100 million on the platform, up 26 percent, per Spotify’s Loud & Clear Brazil release.
It is also why one monthly payout total is not enough reporting from any distributor. For the domestic side, see how Brazil charges streaming as a public performance, how the tax reform treats music licensing, and our guide to distribution platforms for Brazilian artists.
