It was published by the Taxation Division (“DISIT”) of the Federal Revenue Service (“RFB”) to DISIT Answer to Advance Tax Ruling Request (“SC DISIT”) no. 4.028, in answer to challenge by taxpayer that operates in the cars resale management software licensing sector.
The discussion involving software taxation was examined by the Federal Supreme Court (“STF”), which issued an understanding for the assessment of Service Tax (“ISS”) on the trading of off-the-shelf and made-to-order software.
As yet, the interpretation followed by RFB was to consider off-the-shelf software as goods subject to state goods and services tax, while customized software would be the result of a service provision and, therefore, the tax applicable would be ISS.
In the case of SC DISIT no. 4.028/2021, the taxpayer was included in the Simplified Taxation System tax regime, but already expected not the fall within such framework, an opportunity upon which it would start to adopt the assumed profit tax regime.
For the purposes of assumed profit, the activity developed is decisive, since the assumption rate applicable for Company Income Tax (“IRPJ”) and Social Contribution on Net Income (“CSLL”) calculation basis purposes varies according to the nature of the transactions carried out.
As expatiated by the taxpayer in SC DISIT no. 4.028/2021, the transaction consisted of the design of a software upon development of a relational database (service provision) to serve a specific client, which would constitute a distinct activity from the trading of programs (customized or otherwise).

Such type of transaction was the object of analysis by the General Coordination of Taxation (“COSIT”) of the RFB in SC COSIT no. 123/2014. At the time, RFB stated that, in the case of tailored programs (customizes), such tailoring would be mere tweaks, without constituting an actual order. However, if it was proven that the software was a database managing system and that the tweak and the tailoring to the client’s needs represented the development of a relational database (performance commitment), the activity should be classified as service provision (performance commitment), whose profit assumption and CSLL calculation basis percentage is 32%.
RFB also passed judgment on the topic in SC COSIT no. 269/19, establishing that “it is considered that the tailoring performed, for each client, to the finished product represent mere tweaks in the program, allowing the software (which already started before the legal relationship) to meet the needs of such client. Such tailoring does not constitute an actual order for a program and, therefore, the respective income is not accrued due to the provision of services”, stressing that, however, if such tailoring did correspond to the actual development of the software, it would be a service provision.
Based on both COSIT Answers to Advance Tax Ruling Request mentioned above, RFB ruled in SC DISIT no. 4.028/2021 that the taxpayer’s operation in the development of database was not a performance commitment (service provision), but the mere trading of a software already tailored.
Hence, the taxpayer should use as profit assumption for IRPJ purposes the percentage of 8% and, as CSLL calculation basis, the percentage of 12% (applicable to the circulation of goods), and not the percentage of 32% applicable to services.
According to the contents of SC DISIT no. 4.028/2021, it is acknowledged that, even with the new STF understanding, which is not yet finished nor has it covered all scenarios, but that established the assessment of ISS on the sale of software licenses, RFB continued to apply its understanding segregating the taxation of software. One of the outstanding discussions is precisely the percentage applicable to the assumed profit regime.
Written by Camila Cabral, Tax Consultant at Drummond Advisors
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