Normative Instruction RFB Nº 2.191, published this Tuesday (7) by the Federal Revenue Service and received with concern by all who follow the matter, defined the taxation applicable to the gains obtained by Brazilians on platforms to be maintained by fixed odds betting operators in Brazil, both in sports betting and online gaming sections.
Last December, Law No. 14,790/23, which regulated fixed odds betting, was enacted foreseeing, in its article 31, that the net prizes obtained in fixed odds betting would be subject to taxation by the Personal Income Tax (IRPF) at a rate of 15% (fifteen percent).
However, the Executive Branch, through a presidential veto, chose to remove from the bill debated and approved by the National Congress exactly the provisions that (i) defined the net prize provided for in this article as the positive result obtained by bettors in bets each year, after deducting losses incurred with bets of the same nature in the same period; and (ii) established the mechanics of annual tax collection.
With the presidential veto, therefore, a gap was opened in the recently approved law regarding the definition of the "net prize" indicated in article 31 of the law, as well as regarding the form of tax collection on it and the period of assessment.
Today, months after the presidential veto, the same Executive Branch, this time through a normative act of the Federal Revenue Service, established a restrictive concept of "net prize", which expressly prohibits loss offsetting. "Net prize" will be considered the difference between the amount bet and the prize received in each bet (for sports-themed events) or session (for virtual online gaming events) individually considered.
In other words, taxation will be levied on prizes obtained in each bet or gaming session individually considered, with loss offsetting in other events of the same nature expressly prohibited.
The aforementioned encouragement to the informal market may thwart the Brazilian Government's expectation of channeling the fixed odds betting market, replicating bad precedents from abroad, and reducing the volume of resources destined for public coffers, including for the implementation of sports integrity policies, responsible gaming promotion, combating match-fixing, money laundering, and gambling addiction.
By requiring taxation of prizes considered in isolation without allowing loss offsetting, the understanding of the Federal Revenue Service makes it possible to tax bettors who have not earned any actual income (because they have lost more bets than they have won), which weakens the constitutionality of the rule and has a perverse effect on consumers.
In addition to the concept of "net prize", RFB IN 2,191/24 established that the tax will be levied exclusively through withholding tax (IRF), and that withholding must occur at the time of payment or credit of the prize to the bettor. In other words, the assessment period (which in the wording of Law 14,790/23 would be annual) has been restricted to the time interval of each bet.
By defining rules and concepts that should be the subject of ordinary law (such as the tax base and the assessment period), RFB IN 2,192/24 may encourage litigation and judicialization of the issue, greatly harming legal certainty and the healthy growth of a still incipient regulated market.
The rule will put at risk all the good work of regulating the market done so far by the National Congress and the Ministry of Awards and Betting Secretariat, and also fails to understand that the objective of regulation is to encourage positive behaviors both from operators and bettors, also contributing to tax revenue.
For all of the above, the IBJR understands that the best alternative for the thriving and regulated Brazilian fixed-odd betting market today includes the removal of presidential vetoes to Bill No. 3,626/23 by the National Congress, a hypothesis in which the IN 2,191/24 must be reformulated to adapt to the legal text.
IBJR
Brazilian Institute of Responsible Gaming
