The Federal Revenue Service of Brazil (Receita Federal) has implemented new Personal Income Tax (IRPF) guidelines to regulate the taxation of winnings from online gambling and sports betting.
The updates aim to streamline tax collection, eliminate ambiguities in previous legislation, and align with the launch of the regulated Bets market on 1 January 2025.
Licensed Operators to Deduct Tax at Source
Under the new framework, licensed operators in the Bets market are required to deduct a 15% tax at source on player winnings exceeding BRL 2,824 (€530). This ensures immediate compliance and simplifies tax administration. Operators must apply deductions to gross winnings accrued monthly from individual accounts and remit the withheld amount to Receita Federal. Taxes collected at source are treated as advance payments toward the player’s annual income tax declaration.
Despite the operator’s responsibility to deduct taxes, players are still required to keep accurate records of their winnings. The guidelines emphasise that it is ultimately the player’s responsibility to ensure their annual declarations reflect all taxable income.
International Winnings Require Self-Declaration
Winnings from unlicensed international operators are subject to different rules. Since Receita Federal lacks jurisdiction over foreign operators, taxes on these winnings must be self-reported by players through the Carnê-Leão system. Known as the “Lion’s Booklet”, this framework is used to track personal income generated from foreign sources such as investments, pensions, and business activities.
Players must calculate and pay taxes on international winnings monthly, using the Carnê-Leão progressive income tax table. Taxes must be paid by the last business day of the month following receipt of the winnings. Players are fully responsible for ensuring compliance, as international winnings cannot be taxed at source.
Flat Tax for Lottery Winnings
A separate determination applies to fixed-odds lottery winnings. Net prizes exceeding BRL 28,559.70 (€4,606) are subject to a 15% flat tax, calculated annually.
This tax must be paid by the last business day of the month following the annual calculation.
Operators licensed under the Bets regime are mandated to report all taxes deducted at source to Receita Federal. This measure ensures transparency and enforces accountability in gambling transactions. However, expenses incurred from placing bets or losses on other bets cannot be deducted when calculating taxable amounts.
Legal Perspectives on Regulatory Ambiguities
Ana Pamplona, a partner at Ana Helena Karnas Hoefel Pamplona Advocacia, highlighted ongoing challenges with gambling taxation. According to Pamplona, the existing Normative Instruction No. 2,191 of 6 May 2024 faces issues due to the National Congress’s revocation of key presidential vetoes.
“The Federal Treasury had to adjust its approach to reflect parliamentary decisions,” she explained.
Pamplona noted that further regulatory instructions are expected to address unresolved ambiguities, particularly concerning foreign lotteries and consistent application of the 15% tax rate. “The system is adapting to align with current standards, but gaps remain that require legal clarification,” she concluded.
