Who this guide is for
This guide is for foreign companies that supply software to a company of the same group in Brazil, including digital platforms, management systems and technology solutions for healthcare, finance and other sectors.
The first question is what the Brazilian company is contracting: the right to use a program, the right to sell it, access to a platform or technical services.
These operations can be treated differently. This guide focuses on the licence acquired by the Brazilian company as an end user, distinguishing the associated services.
Short answer. According to the Receita Federal's guidance, the acquisition or renewal of a software licence abroad by an end user is a payment of royalties and is subject, as a rule, to 15% withholding income tax. For a beneficiary in a favoured-tax jurisdiction, the rate indicated is 25%.
Royalties are the payment for the right to use or exploit certain assets and rights, including software.
Besides the withholding, there can be contributions on imports, a municipal tax and a tax on the exchange operation. CIDE requires distinguishing the licence from technical services and checking for any transfer of technology.
The total cost should not be calculated only from the 15% withholding. You need to examine the contract, the beneficiary, the services included and who bears each tax.
General information as of October 2026. Confirm your case with your advisors.
Why is the licence treated as royalties?
The Brazilian company pays to use software whose rights belong to, or are lawfully exploited by, the foreign company.
In Cosit Ruling 107/2023, the Receita classified as royalties the payments by the end user for acquiring or renewing a licence, regardless of customisation or means of delivery.
So, under this guidance, the mere fact that the program is standardised or made available by download is not enough to remove the withholding. You can search the ruling on the Receita Federal standards portal.
The treatment must match the rights actually contracted. Licensing a program for internal use is different from acquiring rights to distribute it to customers or contracting a set of cloud services.
The name used on the invoice helps identify the charge, but it does not replace the analysis of the operation.
How much does the parent receive?
You need to distinguish gross price from net amount.
Consider a licence of R$ 100,000 gross, subject to a 15% withholding, with no treaty or different treatment that applies:
| Item | Amount |
|---|---|
| Gross price of the licence | R$ 100,000 |
| Income tax withheld: 15% | R$ 15,000 |
| Net amount for the parent | R$ 85,000 |
This example considers only income tax. Other taxes and expenses can increase the Brazilian company's outlay.
If the contract requires the parent to receive R$ 100,000 net, the gross price must be adjusted. Considering only the 15% withholding, it will be about R$ 117,647.06, with tax of R$ 17,647.06.
This adjustment is called a gross-up. The contract should make clear whether the taxes are deducted from the price or assumed by the Brazilian company.
Maintenance, support and updates
A software charge can combine different obligations:
- The right to use the program.
- Renewal or extension of the licence.
- Technical maintenance.
- Support for users.
- Implementation, integration or customisation.
The Receita distinguishes the acquisition of a new licence from technical maintenance services, including updates that do not create a new licence or extend the original term.
Although the guidance indicates 15% withholding for these technical services, the treatment of the other taxes can be different from that of the licence.
So the contract and the billing documents should identify the deliverables and their amounts when they can be separated. The division must reflect what is actually supplied, with criteria that can be demonstrated.
Which other taxes enter the calculation?
| Tax | What needs to be analysed |
|---|---|
| PIS/Cofins on imports | Treatment of the licence and of the services contracted, according to the guidance that applies to the operation. |
| CIDE | Whether the licence involves a transfer of technology and whether technical services subject to the contribution are contracted. |
| ISS | Classification of the operation and the rules of the municipality responsible for the charge. |
| IOF | Classification of the exchange operation and the rate in force on the relevant date. |
In Cosit guidance 107/2023, the Receita started to treat licensing to the end user as an operation subject to PIS/Cofins on imports, partly revising earlier positions. So an old ruling should not be used without checking whether it still applies to the same situation.
For CIDE, the law provides that the payment for the licence of use or for the rights to sell or distribute software is not subject to the contribution, except when there is a transfer of the corresponding technology (Law 10,168/2000). This rule does not dispense with the separate analysis of the technical services associated.
The transition of the tax reform must also be considered. A projection for the coming years must update the treatment of consumption taxes according to the period of the operation.
What must the contract show?
A useful contract for the Brazilian operation should clarify:
The right granted. Which software will be used, by whom, for how long and with what limits of use, users or territory.
The role of the Brazilian company. Whether it is an end user, distributor, reseller or a service provider that uses the solution.
The additional deliverables. Which support, maintenance, implementation and development activities are included.
The price and the taxes. The gross amount, how much the parent must receive and who bears the withholdings and other charges.
The parent's rights. How it proves that it can supply or sublicense the software.
The link with the Brazilian business. How the tool is used and why the charge makes sense for the operation.
Between companies of the same group, the price must also be examined under the Brazilian transfer pricing rules (Law 14,596/2023). The aim is to check the conditions that would be applied between independent parties in a comparable operation.
Does an old ruling allow paying less?
It is not enough to find a favourable answer on software.
You need to check the date, the facts analysed, the rights contracted and whether the position was later changed.
It is also important to correct a common idea: Cosit rulings do not produce effects only for the one who filed the query. They have binding effect within the Receita and can support other taxpayers who fall within the case examined (see the Receita Federal page on tax rulings).
The analysis must identify the guidance that applies to the current contract, instead of presenting conclusions from different periods or operations as freely available alternatives.
Can a treaty reduce the withholding?
It can, depending on the treaty between Brazil and the parent's country of tax residence.
You need to check how the payment is classified, which article applies and which conditions the beneficiary must meet.
A classification as royalties in Brazilian law does not close the treaty analysis on its own. The text of the agreement and its protocols must also be examined.
Even when income tax is reduced, this does not mean that all the other Brazilian taxes disappear.
See our guide on Brazil's tax treaties to understand this check.
Licence or dividends: how to compare?
A licence pays for a right actually supplied. Dividends distribute profit to the partners. The two operations can coexist and each needs its own basis.
To compare only the Brazilian withholding, consider a parent that must receive R$ 85,000 net:
| Payment | Approximate gross amount | Withholding | Net amount |
|---|---|---|---|
| Dividends, at 10% | R$ 94,444.44 | R$ 9,444.44 | R$ 85,000 |
| Licence, at 15% | R$ 100,000 | R$ 15,000 | R$ 85,000 |
In the licence, other taxes can raise the cost beyond the amounts shown. In dividends, the distributed profit has already been taxed in the Brazilian company.
So this table is not a complete comparison of the group's tax burden.
Under presumed profit, the licence expense, as a rule, does not directly reduce the presumed bases of IRPJ and CSLL. Under actual profit, the analysis is different and depends on the requirements of deductibility and the applicable rules.
The conclusion must consider the whole structure, including the taxation of the income received by the parent. Our guide on dividends covers the other route, and the guide on sending money out of Brazil compares all the routes.
Run your own numbers
The remittance calculator lets you compare scenarios of licence, dividends and other operations with your company's amounts.
Before using the result to decide, confirm the rates, the calculation bases, the services included and whether there is a gross-up to guarantee a net amount to the parent.
The simulation result is free to see; the PDF report is available to subscribers.
Legal basis and sources
Rules and guidance used in this guide, checked in October 2026:
- Receita Federal, Cosit Ruling 107/2023 (search on the standards portal): licence as royalties, 15% and 25% withholding, maintenance and updates, PIS/Cofins on imports.
- Law 10,168/2000: CIDE, and the exception for software licences without transfer of technology.
- Receita Federal, tax rulings: binding effect of Cosit rulings.
- Law 14,596/2023: transfer pricing rules, in force for facts from January 1, 2024.
- Law 15,270/2025: 10% withholding on dividends, used in the comparison.
How we work
Move Advisory is the consulting area of Move Online, an accounting firm in São Paulo founded in 2017.
In the diagnosis, we analyse what the parent supplies, the rights contracted, the associated services and how the price is formed. We calculate the Brazilian cost and check any applicable treaty.
In the operation, we handle the accounting, the withholdings and the declarations contracted. The treatment of the income abroad must be confirmed with the parent's advisors. See the services page.