The remitting abroad as remuneration for the acquisition of Software as a Service (SaaS) are subject to Withholding Income Tax (IRRF), at the rate of 15%, as well as Contribution for Intervention in the Economic Domain (CIDE), to the 10% rate.
This is the position of the Internal Revenue Service, which understands that the user of the analyzed SaaS services does not even know where the technological base of the computerized systems is located. What happens is the provision of a service consisting of access authorizations so that users located at a distance can, through a password, connect any computer with the supplier’s computers (foreign company), using Internet technology, with the purpose of accessing programs and databases that are hosted in indeterminate locations, called “cloud”.
Thus, there is no sale of software to users in Brazil. The software remains under the management of the foreign company abroad, which receives monthly payments as a benefit resulting from the use of distance programs, through the internet. The processing of information is done by the company that develops the software abroad and remains responsible for all the functionalities developed.
SaaS, therefore, is different from acquiring the right to use or market and software. In the latter case, the use license is purchased for you, or for resale. In which case there is no 10% CIDE tax. The case of SaaS is taxed as it is a technical service provision.
In view of this specification, SaaS taxation is defined both for companies that act as a kind of intermediary between the foreign company and Brazilian customers, and for a company that only uses SaaS for itself.
In the latter case, several companies end up directly contracting SaaS services from companies located abroad and do not lead to taxation of either the IRRF or CIDE, as they end up paying for the services by credit card, which ends up generating a tax liability, and effective risk of assessment by the tax Authorities.
Because of this, it is necessary a lot of attention and correct analysis of investors when they intend to invest in Brazilian companies. It is necessary to carefully analyze the hidden tax liability, not as a way to avoid the deal itself, but at least to carry out the correct pricing of your asset.