On August 13, 2025, the Brazilian Supreme Federal Court (STF) ruled on the constitutionality and continuity of the current system of charging the Contribution for Intervention in the Economic Domain (CIDE-Royalties) on amounts remitted abroad, rejecting the argument that its incidence should be restricted solely to contracts involving the transfer of technology.
While the Court was unanimous in recognizing the constitutionality of the levy, it was divided as to the scope of its application. By majority, the position led by Justice Flávio Dino prevailed, according to which CIDE may also be levied on payments related to technical and administrative services and royalties, even when not directly linked to the development or transfer of foreign technology. The central argument of this view is that the relevance lies in the destination of the revenue — the National Fund for Scientific and Technological Development (FNDCT) — rather than in the strict legal nature of the contract.
CIDE-Royalties, created to foster domestic technological development, is levied on payments abroad arising from licensing or technology transfer agreements, as well as on certain technical services and royalties.
In the dissenting opinion, the case’s rapporteur, Justice Luiz Fux, argued that the levy could not extend to contracts unrelated to technological development, such as those involving copyright, software licensing, or legal and administrative services, as such an interpretation would distort the purpose of the tax.
The majority, however, emphasized that the broad incidence of the contribution has constitutional support and serves the objective of strengthening the country’s technological capacity, being comparable, in terms of its revenue allocation logic, to other contributions such as that of Sebrae, which rely on a broad tax base while remaining directed to specific sectors.