The Administrative Council for Tax Appeals (CARF) ruled that Corporate Income Tax, Social Contribution on Net Profits, PIS and COFINS should not be levied on amounts received by self-employed brokers when selling real estate.
The unanimous decision considered that the commissions paid by the buyers of the properties directly to the brokers do not constitute income for the real estate company as a legal entity, precisely because they are third-party income, ruling out the levying of the aforementioned taxes.
The specific case analyzed by the 1st Panel of the 2nd Chamber of the 1st Section of the CARF, which followed the opinion of the rapporteur of the case, dealt with the assessment of a real estate company for the omission of income relating to the amounts paid to independent brokers in the sale of properties on the ground floor.
The Federal Revenue Service, when analyzing the facts and documents, understood that the buyers of the properties, when visiting the STANDS FOR SALE of the real estate projects, did not hire the services of individual brokers, so that the amount of the commission intended to remunerate the self-employed broker should be accounted for as revenue for the real estate company.
However, the inspection did not take into account the fact that the commissions received constitute income for the self-employed brokers themselves, by virtue of a contractual relationship assumed directly by the purchasers of the properties, with the real estate company and the brokers in a partnership relationship.
The decision demonstrates that CARF has been ruling in favor of companies in the real estate sector, since the rapporteur of the case mentioned the precedent set by a February 2018 ruling involving one of the largest real estate companies in the country, where taxation was also ruled out on the understanding that the partnership model adopted between real estate companies and self-employed brokers allows the commissions received by the latter not to be accounted for as income of the legal entity.
In this type of assessment, the tax authorities usually impose huge penalties on real estate agents, of up to 150% of the value of the taxes, as well as including the directors of the companies as jointly liable for the debts.
Faced with this scenario, it is up to real estate agents, with the help of a specialist, to revisit their operating model and broker remuneration, both to make sure they have all the legal documentation they need to mitigate the risks of such assessments and to benefit from a possible reduction in their tax burden.
