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The Federal Revenue Office (RFB) has recently issued Private Letter Ruling (PLR) 2,010/2018, stating that the acquisition of marketing and distribution rights for software generates the payment of royalties to the extent that it involves the resale of software licenses. Therefore, the payments for such rights from a Brazilian resident to a non-resident are subject to a 15% withholding income tax.

This PLR confirms the authorities’ position that such remittances must be subject to the taxation as royalties. Therefore, as stated in other PLRs, the RFB position is that these remittances are not subject to any other federal tax, since there will be no PIS-Imports and Cofins-Imports (PLR 342/2017) and the CIDE-Royalties tax would only apply (at a 10% rate) in case the transaction entails the transfer of technology (i.e., the source code is given to the purchaser – PLR 441/2017).

On the other hand, according to Private Letter Ruling 6,014/2018, also issued recently by the Federal Revenue Office, payments made by Brazilian sources to non-residents for an end-user software license are not subject to such taxation since the software is destined for the exclusive use of the purchaser and there is no intention to sell it to third parties. In this case, the RFB maintains that the license is equivalent to an import of digital goods that is subject to neither the taxes due at regular customs clearance of merchandise nor to the remittances related to the import of services, as long as the software is downloaded by the end-user (a different RFB interpretation applies to software-as-a-service).