By means of COSIT Ruling 191, published on March 29, the RFB
stated that the Imposto de Renda Retido na Fonte
(withholding income tax; IRRF) and
Contribução de Intervenção no
Domínio Econômico (a Brazilian contribution
to finance the stimulation of Brazilian technological
development) are levied on the remuneration paid abroad in
return for the authorisations for remote access and use of
Software as a Service (SaaS) remotely stored
The RFB understood that the granting of authorisation by a
foreign company to access SaaS is not the same as selling the
software, as in such a hiring model the user (client) neither
acquires nor interferes on the software. The client will only
have access to the contracted resources from a distance, as the
software will still be owned and managed by the foreign
company, responsible for all its functionalities.
Thus, in short, the RFB deemed that the company that
provides SaaS offers benefits to its users that are
characterised as technical services, because they rely on
expertise in data processing and derive from automated
structures with clear technological content.
For this reason, the RFB expressly denied the exemption from
the CIDE – established by article 2, paragraph 1-A of
Law 10168/2000 – applicable to the payment for the
license to use and right to sell or distribute computer
programs when there is no transfer of technology.
In this scenario, the RFB held that payments made abroad in
return for authorisation for access and use of SaaS are subject
to the 15% IRRF rate and the 10% CIDE rate.
This is an important administrative precedent because it
evidences the current understanding of the federal tax
authorities regarding the levy of these two taxes on the very
important technological activity at issue, which has no
specific tax regulations.
The RFB has issued several rulings regarding agreements
involving the rights to sell or distribute and to use software,
but this is the first specific ruling about the SaaS, which is
a technology being increasingly used and with a high market
It should be noted that, although it was not analysed by the
RFB, the understanding set forth in COSIT Ruling 191/2017 may
also lead to the charge of the federal social contributions on
the import of services (PIS-import and COFINS-import) on the
payments at issue.
Finally, we point out that this ruling is binding upon the
This article was prepared by Ricardo M. Debatin da
) and Gabriel Caldiron Rezende (firstname.lastname@example.org
), members of Machado Associados’
indirect tax team.