CIDE-royalties confirmed.
10% on international remittances.

The 2025 STF ruling

CIDE-royalties was created in 2000 and has historically been challenged as unconstitutional — a thesis based on the lack of an economic-intervention rationale and on its cumulative nature with the withholding income tax (IRRF).

On 13 August 2025, judging RE 928943 under Theme 914 of general repercussion, the Plenary denied the appeal unanimously and, by majority, fixed the thesis that the contribution is constitutional — the CIDE instituted and governed by Law 10.168/2000, as amended by Laws 10.332/2001 and 11.452/2007 — and that its revenue must be applied in full to Science and Technology. The result: taxpayers who were paying CIDE under protest lose the thesis; taxpayers who were not collecting it are exposed to retroactive assessment (five-year statute of limitations).

What the Court validated, on the material side, was the contribution as the statute draws it — not an extension of the levy to the plain licensing of software. The thesis upholds Law 10.168/2000 exactly as amended by Law 11.452/2007, which is the law that inserted the carve-out of art. 2, §1-A. The item proposed by the rapporteur, Justice Luiz Fux, on the exploitation of software without transfer of technology was not the one adopted.

The ruling closes a quarter-century of dispute and stabilizes CIDE as a definitive tax within the Brazilian tax system — at least until any specific reform. On 29 April 2026 the Plenary refused to hear the second motion for clarification (by majority, Justice Luiz Fux dissenting), and the thesis stands as fixed.

The CIDE-royalties levy

CIDE applies to remittances to persons resident or domiciled abroad in payment of:

• Royalties in general
• Technology-transfer agreements — the exploitation of patents, the use of trademarks, the supply of technology and the rendering of technical assistance (art. 2, §1)
• Software licensing only when the corresponding technology is transferred — a plain licence of use, of commercialisation or of distribution of a computer program is outside the levy (art. 2, §1-A, inserted by Law 11.452/2007)
• Trademarks and patents
• Technical services, administrative assistance and the like (art. 2, §2)
• Intercompany administrative services

The rate is 10% (art. 2, §4) on the gross amount, not the net. Payment is due by the last business day of the fortnight following the month in which the taxable event occurs (§5) — not on the date of the remittance itself.

Total tax burden on an international remittance

A Brazilian company that pays a royalty to a parent company abroad collects multiple taxes:

• IRRF (withholding income tax): 15% (country with a double-taxation treaty) or 25% (tax haven / IN RFB 1.037 list)
• CIDE-royalties: 10%
• PIS/COFINS-Import: 9.25% (on taxed operations; a pure royalty is exempt in some cases)
• IOF on foreign exchange: 0.38%

Typical combined burden

~25% to 35% on the amount remitted. Before the STF confirmation, companies that challenged CIDE had a burden of 15-25%. With the confirmation, the effective rate rose by 10 percentage points.

Technology companies that remit to a foreign parent are the most affected — in general, the royalty represents 5-15% of revenue. What decides the exposure is the object of the contract: where it is a plain licence of use, of commercialisation or of distribution of a computer program, with no transfer of the corresponding technology, art. 2, §1-A rules CIDE out; where technology travels with the licence, the 10% falls on the whole amount.

Mitigation strategies

1. Contractual segregation

Reorganize contracts so that each object is priced separately and the taxable event of each one is visible. The dividing line drawn by art. 2, §1-A is the transfer of the corresponding technology: a plain licence of use, of commercialisation or of distribution of a computer program falls outside CIDE, while the supply of technology, the exploitation of patents, the use of trademarks and technical assistance fall inside it (§1). A single bundled price pulls the whole amount into the levy.

2. Local development

Where the licence does carry the transfer of the corresponding technology, and therefore falls inside the levy under art. 2, §1-A, assess local development or customization instead of continuous licensing from the parent. This reduces the volume of remittances, and with it CIDE.

3. Cost sharing arrangement (CSA)

Structure a cost-sharing agreement between the parent and the subsidiary for joint development of technology. Under OECD rules, a CSA has specific provisions that may reduce CIDE exposure — a case-by-case technical analysis.

4. Case-by-case validation against STJ case law

Even after the STF ruling, there are nuances about the scope of the levy — above all where a given contract sits in relation to the carve-out of art. 2, §1-A, that is, whether the corresponding technology travels with the software licence. The STJ continues to decide specific cases.

5. Treaty optimization

Double-taxation treaties can reduce IRRF (but not CIDE — this is an internal Brazilian tax). Combining an IRRF reduction via treaty with a contractual strategy can lower the combined burden.