Brazil’s Payroll Tax Relief Phase-Out (CPRB): What Subsidiaries Pay Through 2028

For more than a decade, Brazilian software houses, call centers, road freight carriers, builders and a list of manufacturers could swap the 20% employer social security contribution on payroll for a smaller contribution on gross revenue, known as the CPRB. That option is now being unwound. Law 14,973/2024 replaced it with a hybrid that shifts back to payroll a little more each year, and from January 1, 2028 the relief disappears. For a foreign-owned subsidiary in one of these sectors, the 2027 budget is the last one prepared under the transition, and the January payment decides which regime the company follows for the whole year. This guide explains how the phase-out works, what it costs, and what headquarters should check now.

What the CPRB is

Under Law 8,212/1991, an employer pays 20% on the payroll of employees and 20% on payments to individual service providers, plus the workplace accident contribution (RAT, adjusted by the FAP factor) and contributions to third parties such as the S System and education salary. Articles 7 to 9 of Law 12,546/2011 allowed companies in specific sectors to replace the two 20% contributions with a percentage of gross revenue, excluding cancelled sales and unconditional discounts. Revenue from exports is excluded from the base, and so is revenue from international cargo transport. The RAT and third-party contributions were never part of the swap: they stay on payroll in every scenario.

The option is annual. It is made by paying the revenue-based contribution for January (or the first month with revenue) and is irrevocable for the rest of the calendar year (Law 12,546/2011, article 9, paragraph 13). Companies in more than one covered activity apply each rate to the revenue of each activity, and revenue from activities outside the regime keeps the payroll method in proportion.

Who is covered, and at which rate

Coverage depends on the company’s activity code (CNAE) or, for manufacturers, the tariff classification (TIPI) of what it produces, so the first check is whether the subsidiary’s activities really fall within the lists. For technology companies, see also our guide to running a technology or SaaS company in Brazil.

The phase-out year by year

Article 9-A of Law 12,546/2011, added by Law 14,973/2024, turned the full substitution into a partial one for 2025 to 2027. Each year the company pays a falling share of the CPRB rate on revenue plus a rising share of the 20% on payroll:

Two details matter in practice. First, during 2025 to 2027 the payroll share does not apply to the 13th-month salary, Brazil’s statutory annual bonus (article 9-A, paragraph 1), which softens the December cost. Second, Complementary Law 224/2025, which cut most federal tax incentives by 10% in 2026, expressly left the CPRB out of that cut (article 4, paragraph 8, item XII). The schedule above is the one in force in October 2026.

A worked example

Take a software subsidiary with gross revenue of R$ 1,000,000 a month and a payroll of R$ 300,000 a month, plus a 13th-month salary of R$ 300,000. The comparison below covers only the 20% contributions; RAT, FAP and third-party contributions are the same in both columns and are left out.

In this example the saving shrinks from 22% of the contribution in 2025 to about 3% in 2027, and the annual cost rises by R$ 168,000 between 2025 and 2028. With these rates, the hybrid only pays off in 2027 if annual payroll (excluding the 13th-month salary) is more than about 27% of revenue. A subsidiary with lean headcount and high revenue per employee may find that the full payroll method is already cheaper in 2027, while a labor-intensive development center will still benefit. The answer depends on the subsidiary’s own numbers, which is why the decision belongs in the budget, not in January’s payroll run. The full cost of an employee in Brazil explains the other charges that sit on top.

The headcount commitment

Law 14,973/2024 attached a condition to the transition. A company that opts for the revenue-based contribution between 2025 and 2027 must sign a commitment to keep, throughout each calendar year, an average number of employees of at least 75% of the average of the previous year (article 4). If it fails, it loses the option from the following year and pays the full 20% on payroll. The law left the details to executive regulation, so the subsidiary’s adviser should confirm how the commitment is formalized and measured. For groups planning a restructuring, a transfer of activities abroad or a reduction in force in Brazil, the 2026 average is the reference for 2027.

What headquarters should check before January 2027

1. Run the comparison. Project 2027 revenue and payroll by activity and compare the hybrid with the full payroll method, including the 13th-month salary effect. The choice cannot be reversed after the January payment.
2. Budget the 2028 step. In 2028 the contribution moves entirely to payroll. For an IT subsidiary, the jump from 15% to 20% of payroll, without the revenue share, should already appear in the three-year plan.
3. Review intercompany pricing. Development centers that charge the parent on a cost-plus basis will see their cost base rise each year. The markup, the transfer pricing documentation and the parent’s budget need to reflect it (see intercompany transactions in Brazil and running a software development center that exports).
4. Check customer contracts. Long-term contracts priced when the relief was full, common in road freight and outsourced IT, may not allow the increase to be passed on. Readjustment clauses and their indices are worth reviewing now.
5. Revisit the hiring model. A heavier payroll can tempt groups to replace employees with contractors. That carries its own labor risk; our guide on hiring developers in Brazil covers CLT employees, PJ contractors and employer of record arrangements.
6. Configure the systems. Payroll and tax systems must calculate the payroll share, exclude the 13th-month salary while the transition lasts and report the revenue-based contribution in the monthly federal filings. A parallel calculation in January avoids surprises.

The phase-out runs alongside, and separately from, the consumption tax reform. CBS and IBS replace PIS, Cofins, ICMS, ISS and IPI, not payroll contributions, so a subsidiary in a covered sector faces both changes in 2027 and needs both in its plan.

How Solidy can help

Solidy already serves subsidiaries of multinational companies in Brazil. Our payroll and tax teams can model the 2027 option with the subsidiary’s own figures, set up the calculation in payroll and the monthly filings, and prepare the 2028 projection for headquarters. Discover our payroll services or talk to our consultants.