The import or export of services, especially technical assistance related to software and the technology sector, must pay attention to requirements with tax effects.
The definition of the place where the result of the rendered service occurs influences the taxation.
1. Municipality Tax on Services (or ISSQN): The municipal tax on services is not levied on exports of services. However, it applies to those services developed in Brazil or whose result is verified here, even if the payment is made by a resident abroad. The same logic applies to importing services: you must check where the result is held. The rate varies from 2 to 5% according to the law of each Municipality.
2. Federal Tax (PIS/COFINS-Import): If the service is provided abroad or has the result verified abroad, the payments are also not subject to the tax PIS/COFINS-Import. On the contrary, if the service is considered to be provided in Brazil or the result of which is verified here, there will be taxation. The rate can reach 9.25%.
For the Federal Revenue, the “occurrence of the result of the service in Brazil” requires a factual relationship between the result generated by the provision of service that take place abroad and the national territory, which is not the same as an “economic relationship”.
The “factual relationship” encompasses: (a) the virtual entry into the national territory of the result of the service (cases in which the result of the service is immaterial, such as software, music, etc.); and (b) physical entry into the national territory of the result of the service (service that generates a material good or in the case where people or goods benefit from services performed abroad).
For the incidence of PIS/COFINS-Import, it is not enough that the service has only an economic result in the national territory, because, if that were the case, every service contracted by a national legal entity with foreign providers would have its result verified in the country.
There are other taxes that are impacted by requirements relating to services such as: CIDE-remittances and Withholding Income Tax.