The Regional Superintendence of the Brazilian Revenue Service of the 8th Tax Region (SRRF8th), in answer to three consultation proceedings (n. 297, n. 298 and n. 299 of December 10 and 11, 2012), changed SRRF Enquire Solution/8th RF/DISIT n. 310, of October 25, 2004, with respect to the applicability of the Withholding Income Tax (Imposto de Renda Retido na Fonte - IRRF) levied on the distribution of awards in cash according to performance evaluation (Incentive Marketing) to a resident abroad.

In fact, in its previous position, the SRRF 8th determined that the IRRF in this type of remittance, both to an individual and to a legal entity domiciled abroad, should be withheld at a 15% rate.

However, the tax authority clarified that the awards, received in contests, paid, credited, delivered, used or remitted to beneficiaries, resident or domiciled abroad, are subject to the applicability of the income tax exclusively at source at the twenty-five per cent (25%) rate if the beneficiary is an individual and at the fifteen per cent rate (15%) if the beneficiary is a legal entity.

Moreover, it determined that if the beneficiary (individual or legal entity) is a resident or is domiciled in a country with a most favored taxation, the income tax applies only at source at the twenty-five per cent (25%) rate. It also clarified that the paying source is in charge of paying the withholding income tax over the amounts paid.

(Enquire Solution n. 297, Dec. 10.2012, DOU-I, Feb. 04. 2013 / Enquire Solution n. 298, Dec. 11. 2012, DOU-I, Feb. 04.2013 / Enquire Solution n. 299, Dec. 11.2012, DOU-I, Feb. 04.2013).