Brazilian Federal Revenue publishes new regulations on taxation of betting

As part of the regulatory framework for betting, on May 6, 2024, the Brazilian Federal Revenue (RFB) published Normative Instruction No. 2,191 to regulate the withholding of income tax (IRPF) levied on winnings stemming from fixed-odds betting.

The new regulations establish that:

• Prizes worth up to BRL 2,259.20 (i.e., the lowest range of the IRPF monthly incidence table) are exempt from IRPF;
• Income tax on net prizes will be withheld at a rate of 15% when winnings are paid out or credited;
• The betting operator will be responsible for calculating and collecting the IRRF related to the transactions carried out with players;
• The ‘net prize’ is defined as the difference between the value of the winnings and the sum the player bets (calculated for each bet) after the end of a real-world sporting event or for each session of a virtual online gaming event;
• Compensation for losses incurred in other bets or sessions to determine the net prize is prohibited.

Notably, the new regulations clarify that the prize will be determined per sporting event or gaming session, despite the betting industry having requested this be calculated annually (as stated in the original wording of Law No. 14,790/2023, which the Brazilian president vetoed).

For more information on this topic, please contact Mattos Filho’s Entertainment and Tax practice areas.