It is common for companies within the same economic group to enter into cost-sharing agreements to optimize the use of their resources and make their activities and business more efficient.
This type of agreement aims to regulate the sharing of back-office expenses and ancillary activities, usually centralized by a single legal entity within the group, but which benefits the other companies in the group, which reimburse the centralizing company for the costs, according to the allocation criteria defined in the agreement.
This is the case, for example, when the centralizing company hires an accounting firm to prepare the financial statements for all group entities.
The tax treatment of reimbursement of expenses incurred by the centralizing companies, as well as the deductibility of the expense by the company reimbursing the centralizing company, has always been a topic of debate between tax authorities and taxpayers. This discussion was significantly mitigated by the Federal Revenue Service’s statement in Divergence Resolution No. 23 of September 23, 2013, which established the parameters for a cost-sharing agreement. However, this did not eliminate the discussions.
With the approval of the consumption tax reform, whose implementation is scheduled to begin in 2026, these discussions are likely to gain a new perspective.
This is because the triggering event for IBS/CBS, as defined by Complementary Law No. 214/2025, is quite broad and independent of the transaction’s profit.
Furthermore, Article 5 of the Complementary Law expressly allows for the levy of IBS/CBS on the non-onerous provision of goods and services by a taxpayer to a related party, which could reopen the tax discussion on cost-sharing agreements.
To assess the incidence of IBS/CBS under these contracts, it is necessary to distinguish the sharing of services contracted by the centralizing company for the benefit of other group entities from those paid for by the centralizing company on behalf of another entity within the economic group.
This distinction is relevant because Article 12 of Complementary Law No. 214/2025 excludes from the IBS and CBS calculation basis “reimbursement and reimbursements received for amounts paid for transactions on behalf of or on behalf of third parties, provided that the tax documentation related to such transactions is issued in the name of the third party.“
According to this provision, if the centralizing company pays for a service contracted by another group entity, on behalf of or on behalf of the latter, there will be no IBS/CBS levy when the contracting entity reimburses the centralizing company – provided that the tax document related to the service contract is issued in the name of the contracting entity.
This neutrality, however, does not apply to most cost-sharing contracts, in which the shared services are typically contracted directly by the centralizing company, in its own name, and are then partially reimbursed by the other entities in the group that benefit according to criteria of reasonableness and proportionality defined in the contract.
Therefore, it is recommended that companies that use cost-sharing contracts to optimize the use of structures and expenses common to all group entities monitor developments regarding the tax reform regulations and, if necessary, review their structures and contracts.