BRAZIL Law and Practice Contributed by: Luiz Felipe Maia, Flavio Augusto Picchi and Débora Cunha Romanov, Maia Yoshiyasu Advogados – MYLAW
Taxation on players’ winnings Bettors’ prizes are subject to income tax withholding at a rate of 30%, as set forth in Article 732, II of Decree No 9,580 of 22 November 2018. Sports Betting Taxation on the operator As per Article 30, paragraph 1-A, from the proceeds of the revenue, after deductions associated with the payment of prizes and income tax thereon: • 88% will be allocated to cover the operating and maintenance expenses of the operator and other betting games, except for the lottery modalities provided for in Law No 13,756/2023; and • 12% will be allocated as social destinations, for the purposes of education, public safety, sports, social security, tourism, health and other social domains. Taxation on players’ winnings According to Article 31 of Law No 14,790/2023, net winnings from fixed-odds lottery bets are subject to a 15% IRPF rate. Net winnings are defined as the posi- tive results of these bets each year, after deducting any losses from similar bets. The tax applies only to net winnings exceeding the amount of the first bracket of the annual progressive IRPF table – ie, BRL 2,428.80. This rule is also applicable to fantasy sports winnings. Poker Taxation on the operator The taxation applies as follows. • Tournaments ‒ the operator’s gross revenue is the total of the tournament’s entry fees minus the amount separated for the prize pool. This is the tax basis for PIS (0.65% or 1.65%), COFINS (3% or 7.6%) and ISS (2% to 5%).
• Ring games ‒ the operator’s gross revenue is the rake collected in each hand. This is the tax basis for PIS (0.65% or 1.65%), COFINS (3% or 7.6%) and ISS (2% to 5%). Taxation on players’ winnings According to the Brazilian Federal Revenue Ser- vice ( Receita Federal do Brasil RFB), when the prize depends on the performance of the participants, it is deemed as remuneration for the work, regardless of whether the prizes are paid in cash or in the form of goods and services. Therefore, if the prize is paid by a Brazilian legal entity to an individual fiscally resi- dent in Brazil, it will be subject to personal income tax withholding, calculated according to the following progressive tax rates (in Brazilian reais): • from BRL0 to BRL2,428.80 – income tax exemp- tion, no deductible amount; • from BRL2,428.80 to BRL2,826.65 – 7.5% with- holding tax, BRL182.16 deductible; • from BRL2,826.66 to BRL3,751.05 – 15% with- holding tax, BRL394.16 deductible; • from BRL3,751.06 to BRL4,664.68 – 22.5% with- holding tax, BRL675.49 deductible; and • BRL4,664.69 and above – 27.5% withholding tax, BRL908.73 deductible.
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