Brazilian Federal Revenue Service regulates aspects of the taxation of prizes in fixed odds betting lotteries

On 7 May 2024, the Brazilian Federal Revenue (“RFB”) enacted Normative Instruction RFB No. 2191/2024 (“IN RFB 2191”), which regulates aspects of the taxation of the prizes obtained in fixed odds betting lotteries.

IN RFB 2191 provides that net prizes originated from fixed odds betting lotteries will be subject to withholding income tax by IN RFB 2191 (“WHT”) at a rate of 15% on the prize amount that exceeds BRL2,259.20. Net prizes lower than this value are not subject to WHT.

“Net prize” is defined by IN RFB 2191 as the difference between the prize amount received by the taxpayer and the amount staked, calculated for each bet, after the conclusion of a real sports theme event, or for each session of virtual online gaming event, with no deduction allowed for losses incurred in other bets or sessions.

IN RFB 2191 also established that cash prizes obtained in lotteries, including instant lotteries, even those with charitable purposes and/or operated by the State, will also be subject to WHT.

The responsibility for calculating and paying the WHT lies with the betting operators, who are also required to submit the Withholding Income Tax Declaration – Dirf annually.

IN RFB 2191 is part of a group of regulations about the sports betting and online gaming market which have been issued since the enactment of Law No. 14.790/2023.

Our team specialized in Tax Law is closely monitoring the changes impacting the Brazilian market. Additionally, the regulation and development of the gaming and betting sector in Brazil is multidisciplinary in nature and are being monitored by our Tax, Banking and Public Law teams.

For further clarification on this matter, or others that may be of interest to you, contact our professionals.