Brazil Betting Tax: Operator Responsibility

The regulatory evolution of fixed-odds betting in Brazil has been marked by significant progress, particularly following the enactment of Law Nº. 14,790/2023. One key point that has raised ongoing legal debate is who is responsible for collecting income tax (IR) on prizes paid to bettors. The central question is straightforward: Are operators required to withhold this tax at the source?

Based on current legislation and the official interpretation of Brazil’s Federal Revenue Service, the answer is unequivocal: Operators are not required to withhold income tax at the source. This article explains why.

Law No. 14,790/2023 and the Principle of Taxpayer Responsibility

Article 31 of Law No. 14,790/2023 establishes that individual income tax (IRPF) is due on net winnings earned by individuals from fixed-odds betting, at a flat rate of 15%. However, the provision introduces a unique taxation model that significantly departs from traditional frameworks:

• The tax must be calculated and paid annually;

• The taxable base is the net annual result, meaning total gains minus losses from bets of the exact nature;

• The obligation to pay the tax lies solely with the bettor;

• There is no legal provision requiring operators to withhold tax at the source.

This model shifts the tax burden away from the operator and places it directly on the individual taxpayer, reinforcing the principle of personal tax liability before the Federal Revenue.

Normative Instructions and the Resolution of Prior Contradictions

Before the congressional override of the presidential vetoes to the law’s original text, the Federal Revenue amended Normative Instruction RFB No. 1,500/2014, introducing provisions that required operators to withhold tax at source. These changes were made in a transitional legislative context, when Article 31 was not fully enacted.

Once the full legal text was reinstated, these provisions in the Normative Instruction directly conflicted with the updated statute. The Federal Revenue itself acknowledged the need to revise these infra-legal norms, reinforcing the interpretation that any withholding obligation imposed on operators would not only be misplaced, but also legally unsound.

Legal Certainty and Operational Efficiency

The absence of a withholding obligation carries essential implications for betting platform operations:

• It prevents the artificial devaluation of prizes, which would occur if tax had to be withheld before payment;

• It reduces fiscal and administrative burdens on operators, who are not responsible for tax collection;

• It mitigates future legal risks, particularly from outdated or misaligned interpretations of the law.

In short, this scenario provides greater legal certainty, regulatory consistency, and alignment with the core principle of tax legality.

Conclusion

In light of the current legislation and the formal interpretation already issued by the Brazilian Federal Revenue Service, fixed-odds betting operators are not required to withhold income tax at source on prizes paid to individuals. The responsibility lies solely with the player, who must calculate and pay tax annually, based on their net betting results.

This clarification marks an essential step toward regulatory maturity for the industry. It offers predictability and clarity not only for operators but also for bettors and public authorities. In a landscape still undergoing significant transformation, interpretations grounded in the law – and officially endorsed by tax authorities – are essential to support responsible growth and a legally sound, sustainable betting ecosystem.