With the expansion of the energy generation market in Brazil, choosing the right tax regime has become one of the most important factors for the profitability of photovoltaic projects and other energy sources.
The most common question among generators that structure or operate power plants is: is the Presumed Profit or the Actual Profit tax regime more advantageous?
The answer, according to experts consulted by Canal SolarThere is no single solution, and any generalization can be costly. This is because the tax impacts vary according to the project's margin, operational costs, the use of tax incentives such as REIDI (Special Incentive Regime for Infrastructure Development), intermediation through trading companies, and the structuring of operational contracts.
Presumed Profit: Simplicity that can become a trap.
Adopted by a large number of companies that lease assets, as is the case with distributed generation and self-production projects through leasing, the Presumed Profit regime's main attraction is the simplicity in calculating taxes on profit, as well as PIS and COFINS.
Under this system, Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) are levied on a pre-fixed profit margin on revenue (tax base), regardless of the company's accounting profit.
For asset leasing activities, the presumed profit percentage for calculating the tax base is 32%, for both Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL). For energy sales activities, in both the free and regulated markets, the presumed profit percentage is 8% for IRPJ and 12% for CSLL.
According to tax lawyer Natália Fengler, the model works well for projects with high profit margins and a lean operational structure, where deductible costs are minimal.
"The presumed profit method is usually advantageous when the company has a high margin and few deductible costs, since the tax is levied on a 'fixed' margin, even if the actual profit is higher. The point of attention is that, with the increase in the tax burden and possible adjustments to the regime, it can become burdensome for those who do not sustain this margin in practice," he explained.
For small entrepreneurs in the photovoltaic sector or companies that act solely as integrators, the model is usually functional. But as projects involve large-scale generation, leases, financing, or partnerships with trading companies, the risks increase.
Real Profit: More work, but with potential for savings.
The Actual Profit regime, on the other hand, requires a more detailed calculation, with complete accounting records and monitoring of all deductible expenses.
Conversely, the company only pays tax on actual profit, which can generate significant savings in projects that operate with lower margins or large investments.
Under this system, the following are deductible:
- Depreciation of generation assets;
- Financing interest;
- Operation and maintenance (O&M) costs;
- Insurance and rentals;
- Administrative and commercial expenses;
- Accumulated tax losses.
Tax reform: what changes for the electricity sector from 2026 onwards?
Natália points out that this regime makes more sense when the project has a smaller margin, significant costs (O&M, asset depreciation, financing interest, insurance, leases, etc.) or tax losses to offset. "In that case, the tax follows the actual profit, and not a presumed profit that often does not reflect the reality of the business," she clarifies.
"Furthermore, looking at tax reform, actual profit tends to gain even more relevance, as it allows not only more efficient taxation of corporate income tax (IRPJ) and social contribution on net profit (CSLL), but also a broader use of IBS and CBS credits, which is especially relevant in projects intensive in..." CAPEX"Like those in the power generation sector," he adds.
Another point is that with the entry into force of CBS (Contribution on Goods and Services) and IBS (Tax on Goods and Services), which will replace PIS/COFINS and ICMS/ISS, the Real Profit regime also becomes more attractive by allowing greater use of tax credits, especially in projects that are intensive in equipment and services.
REIDI and contractual structure change the game.
For the tax lawyer Einar Tribuci, specializing in tax planning for the energy sector, believes each project must be analyzed individually.
He warns that choosing the ideal regime depends on several variables, such as the use of REIDI (Special Regime for Infrastructure Development), the need for leverage with tax benefits (tax shield), the intermediation of contracts by trading companies, and the contractual structure adopted.
"The simulations we have been conducting for our clients, applying the various changes in our tax legislation, have not yielded the same results. This is because the assumptions need to be very well mapped out in order to carry out these simulations," he states.
“As a general rule, operations that do not have PIS and COFINS credits, since the acquisition of equipment was made using the REIDI benefit, and without leverage, tend to favor the choice of presumed profit. On the other hand, more complex operations favor actual profit,” he adds.
“Another sensitive point is whether the partners want a cash-generating operation or one that presents better long-term accounting results. This can make all the difference in choosing the best tax regime for that taxpayer,” he adds.
Among the points of attention he listed are:
- Projects with REIDI (Special Regime for Infrastructure Development): although they exempt PIS/COFINS, CBS and IBS on the purchase of goods, they do not allow for the taking of tax credits;
- Revenue structure: contracts with segregation of revenue types alter the calculation basis for Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) under the presumed profit regime;
- Hybrid models: companies that act as generators, lessors, and integrators simultaneously require more sophisticated tax planning.
“It’s not uncommon to see projects that opted for the Presumed Profit method for simplicity and then realized they were paying tax on a fictitious margin. In some cases, switching to the Actual Profit method becomes imperative,” says Tribuci.
Tax reform exacerbates the difference between models.
The approval of the tax reform brings a new element to the equation. The replacement of current taxes with CBS (federal) and IBS (state/municipal) will change the format of tax credits, which should benefit companies under the Real Profit regime, especially those with a large volume of acquisitions and operating expenses.
“In the new model, credit will be broader and based on everything that is acquired, as long as it is properly registered. The Real Profit system allows for more efficient use of this credit, which can represent an important competitive advantage,” reinforces Natália.
This advantage is even more relevant for generators with large-scale or expanding projects, who will need to recoup high investments over decades.
Tax Planning
Given so many variables, experts are unanimous: there is no better or worse tax regime, but rather the most suitable one for each project. The right choice requires simulation of the regimes, accounting analysis, evaluation of applicable incentives, and knowledge of current legislation.
“The decision regarding the tax regime can directly impact the economic viability of the project. You can't choose based on guesswork or practicality. Technical planning and a long-term perspective are necessary,” concludes Einar.
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