Internal Revenue Service regulates taxation of Fixed Odds bets

Internal Revenue Service regulates taxation of Fixed Odds bets

The Internal Revenue Service recently regulated the taxation of fixed-odds betting, establishing clear guidelines for the levying of Personal Income Tax (IRPF) on net winnings obtained in this way. In this article, we will explore in detail the changes brought about by this regulation, the implications for companies in the sector and the guidelines for complying with the new tax guidelines.

Fixed odds betting taxation: changes and implications

A Internal Revenue Service has just released an important regulation regarding the taxation of net winnings from fixed-odds lottery bets. The Instruction RFB Normative No. 2.191published on May 6, 2024, establishes clear guidelines for the taxation of these premiums, subjecting them to Personal Income Tax (IRPF) at a rate of 15%. 

Seguindo as disposições da Lei nº 14.790/2023, The prizes from these bets will be subject to the Personal Income Tax (IRPF) rate of 15%. This measure, in addition to ensuring transparency and efficiency in the application of tax legislation, brings important changes to the rules in force.

One of the main changes is the modification of the Normative Instruction RFB No. 1.500, of 2014, que passa a estabelecer a não incidência do IRPF sobre o prêmio em dinheiro recebido na modalidade de quota fixa, desde que seu valor esteja compreendido na 1ª faixa da tabela de incidência mensal do IRPF. Isso se deve ao fato de que os ganhos obtidos nessa nova modalidade lotérica se incluem no disposto no art. 56 da Lei nº 11.941, de 27 de maio de 2009.

What's more, the standard also includes cash prizes won in lotteries in general and net prizes won in fixed-odds bets as income taxed exclusively at source. To ensure greater clarity, the instruction defines the concept of net premiums.

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What is the Fixed Quota

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What is the definition of net premiums?

Net winnings are defined as the difference between the value of the winnings and the amount wagered, i.e. the increase in assets obtained by the bettor, calculated for each bet after the end of the real sporting event or for each session of the virtual online gaming event, with losses incurred in other bets or sessions not being deductible.

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Liability of operating agents

Another highlight of the regulation is the definition of the moment of incidence, calculation basis and rate of IRPF, and the operating agent is responsible for its verification. The regulation establishes that betting operators are responsible for calculating and paying the IRPF relating to the operations they carry out, contributing to the efficient application of tax legislation.

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Guidance for companies

The Normative Instruction RFB no. 1.990/2020 has been adjusted to include fixed odds bookmakers among the taxable persons obliged to submit the Withholding Income Tax Return (Dirf) and Digital Tax Bookkeeping of Withholdings and Other Tax Information (EFD-Reinf). Essas mudanças na tributação afetarão as apostas de quota fixa regulamentadas pela Lei nº 14.790/2023, operated by legal entities headquartered in national territory and authorized by the Ministry of Finance.

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