On 1 July 2026, the Brazilian Federal Revenue Service (RFB) published Solução de Consulta Cosit No 96/2026, a binding ruling addressing the computation of capital gains tax on contingent purchase price, with a direct bearing on M&A transactions. The new position is of particular relevance to sellers of equity interests who are subject to the progressive capital gains tax rates and are entitled to contingent instalments of the purchase price, as occurs in earn-out arrangements, the release of amounts held in escrow accounts and other contingent receipts (superveniências ativas).
The RFB’s new position
Where the payment made at completion is definitive – not subject to adjustment or clawback – and the contract merely provides for additional instalments of the price conditional upon a future and uncertain event, the receipt of those instalments, arising from the fulfilment of a condition precedent, constitutes a fresh taxable event for capital gains tax purposes (Articles 43(II) and 117(I) of the Brazilian National Tax Code – Código Tributário Nacional). That fresh event is assessed under its own progressive scale, starting from the 15% bracket, without any aggregation with the gain taxed at completion.
In practical terms, the contingent instalment may restart the application of the progressive scale from 15%, even where the definitive price had already reached the top rate of 22.5% at completion. Example: a founder receives a contingent instalment of BRL 8 million in 2027 – constituting capital gain in its entirety, the acquisition cost having been used in full at completion – having taxed the completion price up to the top bracket of 22.5%. Under the consolidation approach hitherto prevailing, the amount would be taxed at the top of the scale (BRL 1.8 million). Under SC 96/2026, the standalone assessment allows a substantial portion of the gain (the first BRL 5 million) to remain within the 15% bracket, provided the formal requirements for its application are observed.
This scenario is not to be confused with that addressed in Solução de Consulta Cosit No 82/2023 – to which SC 96/2026 is partially bound – which is confined to disposals without a predetermined price, in which the amount received at completion is a mere advance on a price to be determined at a later date. Only in that scenario is the gain consolidated and recomputed by reference to the total consideration (advance plus balancing payment), with a credit for the tax paid on the advance, so that the balancing payment may be caught by the upper brackets of the scale. The contractual characterisation of the completion payment is therefore the element that determines the applicable computation regime.
Points to note
Transactions predating 2017: for sales completed under the former flat rate of 15%, the ruling subjects contingent instalments received from 2017 onwards to the current progressive rates of up to 22.5%. There are grounds for contending that the legislation in force at completion should apply – treating the subsequent payment as the mere financial realisation of a price already agreed under a legal transaction definitively constituted – which may warrant consideration of defensive measures on a case-by-case basis.
Receipts arising from the same fulfilment: amounts received in the course of the same tax year and arising from a single fulfilment of a condition are aggregated with one another, with cumulative monthly assessment and a credit for the tax paid in previous months.
Single fulfilment versus autonomous fulfilments: the segregation of independent contingent receipts, each constituting a taxable event in its own right, is likely to require robust contractual underpinning, with distinct and verifiable conditions precedent.
Acquisition cost and adjustments: where the acquisition cost of the shares was used in full in computing the gain at completion, the contingent instalment constitutes capital gain in its entirety. Interest and monetary adjustments do not form part of the disposal proceeds and are subject to their own tax treatment – by withholding at source or under the carnê-leão monthly self-assessment regime, with annual adjustment – pursuant to Article 19(3) of Normative Instruction SRF No 84/2001.
Next step
In M&A transactions, the contractual structuring of contingent purchase price instalments becomes a determining factor in the seller’s effective tax burden. The definitive characterisation of the completion payment, the identification of the taxable event, the autonomy of the conditions fulfilled and the segregation of adjustments cease to be mere completion formalities and become central planning variables from the earliest stages of negotiation and the drafting of the definitive agreements.
Our team remains at your disposal to assess the specific impact of this new guidance on transactions currently in progress or imminent.
Gustavo Coelho
Partner, corporate and regulatory law
gustavo@bastilhocoelho.com.br
Mateus Ilá
Lawyer, tax and customs law
mateus@bastilhocoelho.com.br
This analysis is for information purposes only and does not constitute formal legal advice. Prepared on the basis of Solução de Consulta Cosit No 96, dated 24 June 2026 and published on 1 July 2026, and Solução de Consulta Cosit No 82, dated 4 April 2023.
