Recently, in January this year, the Federal Revenue Office (RFB) published Inquiry Solution No. 2/2025 from the General Coordination of Taxation (COSIT), which addresses the taxation of earnings from sports contests and online games, both national and international. The taxpayer questioned whether earnings obtained from bets, such as poker tournaments, would be subject to the collection of Individual Income Tax (IRPF) and what the calculation method would be.
Regarding profits from bets and online games, RFB made it clear that there is no legal provision exempting such earnings from individual income taxation, as income taxation would not depend on the designation of the earnings, the location, or the legal status of the source; the only requirement is that there be a benefit to the taxpayer in any form. In other words, the fact that it is income gives rise to individual income taxation, regardless of its source.
However, RFB's response clarifies that there would be different forms of taxation and calculation of these amounts depending on the earnings and their origin.
In the case of sports contests or online games that involve performance assessment and are conducted in Brazil, the prize is considered remuneration for work. In this case, income tax is levied at the source and calculated according to the monthly progressive tax rate table, as a form of advance payment of the amount due in the Income Tax Return (DAA in Portuguese) of the individual, as provided for in Article 701 of the 2018 Income Tax Regulation (RIR in Portuguese).
We understand that this position is contradictory, as labor income is taxed differently depending on the origin of these amounts.
Furthermore, RFB states that there is no legal provision allowing the deduction of expenses related to placing bets and playing games in order to calculate the mandatory monthly payment. In this regard, taxes will be levied upon the total earnings obtained in the month, without the possibility of offsetting earnings against losses. This, however, could result in disproportionate taxation for individuals who incur losses from their bets over the year.
The Inquiry Solution also clarifies that the taxation indicated above is different from the taxation on net prizes obtained from fixed-odds lottery betting.
For this lottery type, the Betting Law (Law No. 14,790/2023) establishes a specific tax regime for the results of these websites. However, RFB itself acknowledges that the topic still needs to be reviewed and adjusted under the law, which demands careful attention from taxpayers.
In the case of fixed-odds lotteries, the law establishes that the net prizes obtained, exceeding the amount of the first bracket of the annual progressive table, will be imposed a personal income tax (IRPF) of 15%, and the tax will be calculated annually and paid up until the last business day of the month following that of calculation.
In this scenario, IRPF will not be paid in advance through mandatory monthly collection (carnê-leão) nor will it be withheld at source, and the taxpayer will be responsible for calculating it, unlike the interpretation of RFB for the taxation of online bets without fixed odds.
In light of this, the RFB's understanding is clear regarding three points:
- Income tax will be levied in case of online betting in Brazil, and the earnings will be withheld at source, according to the monthly progressive IRPF table.
- Income tax will be levied in case of online betting abroad, and the earnings must be reported to RFB and have the corresponding tax paid monthly through carnê-leão, using the current monthly progressive table.
- Income tax will be levied in case of fixed-odds online betting, and a tax rate of 15% will be levied upon net prizes exceeding the amount of the first bracket of the annual progressive IRPF table.
In addition to the tax aspects, it is essential to evaluate the topic from a regulatory perspective, considering the existing restrictions on certain types of games and betting.
This statement from the RFB has significant implications for the online gambling and betting market, and it is crucial for operators and bettors to be aware of the new guidelines and fiscal obligations.
