Brazilian tax authority rules cross-border payment for software as a service (SaaS) subject to withholding

by Francisco Lisboa Moreira & Carolina Silveira Becman

Through an answer to Formal Consultation Request No. 191/2017, the Brazilian Federal Revenue Service (RFB) has expressed its opinion on the taxation of amounts paid, credited, used, delivered, or remitted abroad on the acquisition of access and remote use of software as a service (SaaS).

The case was presented by a company that markets access authorizations and use of SaaS acquired from suppliers located in the United States. The taxpayer contacted the RFB aiming to clarify its understanding on the corresponding taxation.

According to RFB, SaaS is considered a technical service once it depends on specialized knowledge of computer science and arises from automated structures with clear technological content. As such, SaaS is subject to the income withholding tax (IRRF) and contribution for economic intervention (CIDE), at the respective rates of 15% and 10%., the Brazilian tax authority concluded.

RFB stressed that the acquisition of SaaS does not involve the effective transfer of the software, but only the granting of remote and temporary access. The administration, maintenance, and technical support is provided by the foreign supplier, which receives monthly payments for the use of the software.

It is important to note that Formal Consultation Request No. 191/2017 was based on contracts and other documents that supported a specific acquisition of SaaS, which was considered as a technical service due to the circumstances presented.

Therefore, despite of the RFB’s conclusions in this case, it is still necessary to analyze the individual nature of each SaaS acquisition to determine the applicable taxation.

The Brazilian policy position in this matter is to reinstate source taxation and make the payment or production of income genuine links to taxation under Brazilian law, even though the business enterprise is domiciled abroad and the “transaction” takes place in a digital environment.

–Francisco Lisboa Moreira is a tax partner at Castro, Barros, Sobral, Gomes law firm. He holds an International Tax LLM from NYU and is currently pursuing his Master’s at the University of São Paulo. He can be reached at

— Carolina Silveira Becman is a tax associate at Castro, Barros, Sobral, Gomes law firm. She has a Law degree from the Federal University of Rio de Janeiro and can be reached at

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