Performance-based bonuses and legal certainty: New interpretation by the Federal Revenue Service

The Brazilian Federal Revenue Service, through Consultation Solution (Solução de Consulta) COSIT No. 10/2026, consolidated a relevant interpretation for companies by recognizing the non-incidence of social security contributions on bonuses granted for performance exceeding expectations, provided that objective legal requirements are met. According to the tax authority, bonuses granted at the employer’s discretion — whether in cash, goods, or services — are not included in the calculation basis of INSS contributions when: (i) paid exclusively to employees; (ii) linked to performance that effectively exceeds what is ordinarily expected; (iii) based on clear, objective, and measurable criteria; and (iv) not arising from contractual obligations or collective bargaining agreements that would undermine their discretionary nature.

The position aligns social security taxation with the labor law concept of bonuses and reduces a longstanding area of uncertainty in variable compensation policies. For companies, this interpretation represents an opportunity to structure incentive programs with greater legal predictability and tax efficiency — provided that adequate governance, robust documentation, and transparent criteria are in place. In practice, the decision reinforces the importance of reviewing internal bonus policies, employment contracts, and collective instruments in order to mitigate the risks of assessments and social security contingencies.