Brazil: IRPJ, CSLL, PIS And COFINS Under Law 12973/14 And Normative Instruction RFB 1515/14

Last Updated: 17 November 2015
Article by Cristiane Magalhães

Article by Cristiane M. S. Magalhães and Stephanie Makin1

1. Upon the entry into force of Law 12973/142, regulated by Normative Instruction of the Brazilian Federal Revenue Service 1515/14 ("IN 1515"), Brazilian legal entities must calculate the Corporate Income Tax ("IRPJ"), Social Contribution on Net Profit ("CSLL") and Social Contributions on Revenue ("PIS and COFINS") based on these rules.

2. Articles 1, 2, 4 to 70 and 1173 of the mentioned Law introduced changes to the tax rules seeking to adapt them to the accounting rules in force as of January 1st, 2008, based on the International Financial Reporting Standards (IFRS), and revoked the Transitory Tax Regime ("RTT").  Under this regime, Brazilian legal entities calculated the IRPJ, CSLL, PIS and COFINS based on the results ascertained according to the accounting rules in force on December 31st, 2007, thus, disregarding any tax effects that could arise from the adoption of the IFRS.

3. For purposes of the transition to the system of Law 12973, companies are required to maintain several additional accounting controls in order to ensure the tax neutrality of transactions occurred before the initial adoption date. Therefore, the companies must consider any differences between the transaction amounts registered in the RTT and in the accounting records of the company in the calculation of the IRPJ and CSLL if such differences are not evidenced in subaccounts.

4. Subaccounts are also required for Present Value and Fair Value adjustments not to be considered in the calculation of IRPJ and CSLL upon their recording. In summary, Law 12973 maintains the treatment set out under the RTT, allowing Present Value and Fair Value adjustments to be considered in the calculation of IRPJ and CSLL (i) upon the taxation of the respective income; (ii)when the asset if sold, written off and/or depreciated; and (iii) the expense or cost is incurred, provided such amounts are evidenced in subaccounts.

5. Law 12973 allows companies to deduct the depreciation calculated on the acquisition cost using the straight line method and the rates established by the Brazilian Federal Revenue Service, despite of the criteria and method adopted for accounting purposes4. Thus, if the depreciation for tax purposes exceeds the depreciation for accounting purposes, the legal entity may exclude such excess from the IRPJ and CSLL taxable bases.

6. If the asset is sold or written-off, the difference between the total depreciation considered for tax purposes and the total depreciation registered in the accounting books must be included in the IRPJ and CSLL taxable bases. The sum of the total depreciation registered in the accounting books and of the additional amounts excluded from the taxable basis of IRPJ and CSLL may not exceed the asset's cost of acquisition.

7. According to IN 1515, depreciation expenses not deducted in the correct period cannot be deducted cumulatively with the expenses of subsequent periods, nor is the taxpayer allowed to use higher depreciation rates than the ones set out by the Brazilian Federal Revenue Service.

8. As regards goodwill arising from the acquisition of an investment in another Brazilian legal entity, Law 12973 continues to allow its tax deduction, provided additional requirements are complied with. According to the new rule, upon the acquisition of the equity stake, the investment cost must be segregated into:

(i) proportional net equity value of the target company;

(ii) the surplus or deficit arising from the difference between the fair value of the net assets of the target company and item (i); and

(iii) goodwill, which corresponds to the remaining balance from items (i) and (ii).

9. In case a bargain purchase gain is recognized (if the fair value of the net assets exceeds the investment acquisition cost), such gain must be excluded from the calculation of the IRPJ and CSLL, in order to be included at a later time.

10. The recording of the investment must be supported by an appraisal report prepared by an independent expert appraiser. Such report must be registered before the RFB or have its summary registered with the Public Register for Deeds and Documents up to 13 months after the acquisition.

11. Similar to the previous rules, upon the sale or write-off of the investment, surplus or deficit and goodwill amounts shall be considered as part of the cost of the investment for the purposes of calculating the capital gain and any bargain purchase gain must be considered in the taxable basis  of IRPJ and CSLL.

12. In principle, the legal entity that absorbs the net worth of its invested or investing companies, upon merger, amalgamation or spin off:

(i) may consider as part of the cost of the respective assets the corresponding surplus for the purposes of calculating the capital gain or loss and of depreciation/amortization, provided the target company was acquired from a non-related-party5;

(ii) shall consider as part of the cost of the respective assets the corresponding deficit for the purposes of calculating the capital gain or loss and of depreciation/amortization;

(iii) may consider as a deductible expense at the maximum rate of 1/60 per month of the goodwill balance, provided the target company was acquired from a non-relatedparty; and/or

(iv) shall consider the bargain purchase gain at the minimum rate of 1/60 per month in the calculation of taxes.

13. The regulation establishes additional rules in order to consider the amounts mentioned above in the calculation of IRPJ and CSLL.

14. Law 12973 also provides specific tax treatment for certain transactions previously not regulated by tax legislation such as:

(i) impairment (IAS 36): must be considered as a provision. Thus, may not deducted from the IRPJ and CSLL taxable bases upon its recording, but may be excluded upon the sale or write-off of the asset;

(ii) borrowing costs (IAS 23): if recorded as a cost of the asset, it may deducted for tax purposes when the borrowing costs are incurred, case in which such amounts must be added to the taxable bases of IRPJ and CSLL upon the depreciation, amortization, sale or write-off of the asset;

(iii) share-based payments to employees or similar (IFRS 2) – includes officers and members of the Board of Directors: expenses are only considered as tax deductible after the actual payment or definitive delivery of the shares or equity instruments by the entity to the employee; and

(iv) intangibles (IAS 38): amortization expenses shall be considered as tax deductible as long as the intangible is closely related to the production or sale of the assets and services.


1.  Cristiane M. S. Magalhães and Stephanie Makin of the Direct Taxes area at Machado Associados Advogados e Consultores.

2  As of January 1st, 2014 or January 1st, 2015, at the taxpayer's .option.

3.  Changes promoted in the rules for the taxation of profits earned abroad (articles 76 to 92 of Law 12.973) were analyzed in detail in Legal Letter 199 (November/2013).

4.  The accounting depreciation is calculated based on the cost less residual value and considering the useful life of the asset (IAS 16).

5.  In summary, the acquirer and the seller are considered as related parties, as per article 103 of IN 1515, if: (i) they have a common shareholder; (ii) the acquirer controls the seller (or vice versa); (iii) the seller is an individual who is a partner, director, member of the Board of Directors etc. of the acquirer; etc.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions