News | Court overturns withholding of 10% income tax on dividends under the Simples Nacional tax regime. 

The Federal Court issued a ruling in favor of a law firm that opted for the Simples Nacional tax regime, eliminating the requirement to withhold income tax on profit distributions to partners. 

The discussion arose after the publication of Law No. 15.270/2025, which included Article 6-A in Law No. 9.250/1995. The new rule now provides for the withholding of 10% of income tax on profits and dividends paid to individuals, whenever the monthly amount exceeds R$ 50,000.00. 

However, the main argument presented in the lawsuit was that Complementary Law No. 123/2006, which regulates the Simples Nacional (Simplified National Tax System), guarantees income tax exemption on profits distributed to partners. Thus, an ordinary law could not limit or alter a benefit provided for in a complementary law, as established by the Federal Constitution. 

Upon reviewing the case, the judge agreed with this understanding and emphasized that Article 146 of the Constitution stipulates that the rules related to the differentiated treatment of companies under the Simples Nacional (Simplified National Tax Regime) must be defined by complementary law. For this reason, the decision concluded that Law No. 15.270/2025 could not expand the taxation of companies classified under this regime. 

Therefore, an injunction was granted suspending the obligation to withhold income tax on profit distribution until the final judgment of the case. 

Partner Comment | Ricardo Alegransi 

For Ricardo, the decision reinforces an essential point: the Simples Nacional (Brazilian simplified tax regime) has specific legal protection and its rules cannot be altered by regulations that contradict the logic of the regime. “This is a relevant discussion, as it directly impacts companies and professionals who depend on tax predictability. The decision signals that changes of this type need to respect constitutional limits and the hierarchy of norms, but there is still a long way to go before we have a conclusive decision on the subject,” the partners emphasize.