In a recently published panel decision, the Superior Chamber of Tax Appeals (Câmara Superior de Recursos Fiscais – CSRF) decided, by casting vote, that Contribution for Intervention in the Economic Domain (Contribuição de Intervenção no Domínio Econômico – CIDE-Royalties) is imposed on remittances related to a license agreement of foreign movie distribution in Brazil. The discussion began with the request for reimbursement submitted by Sony Pictures Home Entertainment do Brasil to the Brazilian Revenue Service, aiming at obtaining the reimbursement of the CIDE-Royalties unduly paid over the payments made to Columbia Tristar as copyrights for the distribution of foreign movies in the Brazilian territory.

The Brazilian legislation establishes that “royalties” are characterized as any income received for the use, enjoyment, exploitation of rights, including the exploitation of copyrights, except when received by the work’s author or creator.

Sony alleges in its defense that the CIDE was not due because (i) the movies are delivered ready to be commercially exploited, without any technology transfer and that the CIDE-Royalties was paid; (ii) “royalty” means a mere copyright remuneration, instead of payment for the film’s result; and (ii) bis in idem, since Sony also pays the CONDECINE over such amounts.

The Reporting Counselor Henrique Torres argued firstly that no bis in idem occurred in this case, because this principle would be valid only for the taxes (not for contributions), as provided in art. 154, item I of the 1988 Federal Constitution.

Moreover, it makes a distinction between the situation where Sony directly hires a director, singer or writer and pays directly to him a remuneration for the copyrights, when no “royalty” is paid, and, this case, which would be equivalent to a payment for the exploitation of a third party´s copyright, because Columbia Tristar is only the film producer. Thus, this remuneration should be classified as “royalty” and, therefore, is subject to the applicability of the CIDE-Royalties.

Although the reporting member of the CSRF has neither discussed the issue nor analyzed the actual case more deeply, he grounded his decision on the fact that the contract between Sony and Columbia Tristar itself used the term "royalty” to refer to the income.

The CSRF decision consolidates the interpretation that the CIDE-Royalties is imposed on any payment made as royalty, irrespective of the technology transfer.

(Panel Decision n. 9303-01.864. Available at: <>. Access in: May 2013).