Online Betting and Gaming Taxation: New Federal Revenue Guidelines

The Cosit Consultation Solution No. 2, published on January 16, 2025, provides crucial clarifications on taxation of winnings from sports betting and online gaming for Brazilian residents:

Bets Made Within Brazil

• Winnings on National Platforms:
  • Treated as work compensation
  • Taxed at source using monthly progressive income tax rates
  • Withheld tax counts as advance payment for annual tax declaration
  • Losses cannot be offset against gains in the same period

• Fixed-Quota Lottery (Bets):
  • Regulated by Law No. 14.790/2023
  • Net prizes taxed at 15% if exceeding first annual progressive tax bracket
  • Net prize = positive balance after deducting same-year losses
  • Annual tax calculation and payment by last working day of following month
  • Exempt from source withholding and carnê-leão payment

 Foreign Income

• Mandatory Carnê-Leão Payment:
  • Applies to prizes from foreign platforms
  • Monthly calculation of all prizes
  • Converted to Brazilian real using USD exchange rate from last working day of previous month’s first half
  • Values included in annual tax declaration
  • No deduction of betting expenses or compensation between gains and losses

• Taxation on Foreign Prizes:
  • Tax applies even without transferring funds to Brazil
  • Based on taxpayer’s fiscal residence
  • Potential tax credit for taxes paid abroad under reciprocity agreements
  • Tax must be non-refundable in country of origin