Brazil’s CIDE tax on music royalties sent abroad has finally been deemed unjustified

After a prolonged legal dispute, Brazilian society UBC's argument against the legality of the CIDE tax deduction on music royalties paid to sister societies has prevailed. This means that societies represented by UBC will now be able to benefit from the decision, as they will be paid back the deductions for payments made since November 2015.

UBC began challenging the fine imposed by the Brazilian Fiscal Authority in 2008 for not paying the CIDE tax on remittances of music rights to foreign sister societies. In the administrative phase of the case, UBC was unsuccessful and faced a fine of over R$ 50 million. However, pending confirmation of the decision, UBC disagreed with the Authority's position.

After exhausting all administrative avenues and disagreeing with the Authority's interpretation, UBC turned to the Judiciary to obtain a judicial ruling to exempt music rights collected in Brazil and sent to foreign rightsholders from the CIDE tax. In November 2015, UBC began withholding the 10% CIDE amounts on remittances as a precautionary measure, promising to distribute the withheld amounts in the escrow account if successful in the lawsuit. All foreign partners with representation contracts were duly informed of this commitment.

After a seven-year legal dispute, UBC is pleased to announce its complete victory in the lawsuit. The final decision from the Superior Court of Justice affirmed UBC's argument, resulting in the deemed unjustifiability of CIDE payments on remittances of music rights abroad. UBC's thesis was successful in all instances, marking a significant triumph and setting an important judicial precedent.

This victory brings great relief as we approach the new assessment in late 2022, the only calendar year that remains in dispute. It also enables the distribution of most of the withheld amounts thus far and allows us to resume sending remittances of royalties to our foreign partners without retaining the CIDE tax, from September 2023 on. 

UBC CEO Marcelo Castello Branco welcomes the remarkable result as a solid confirmation of our UBC’s commitment and how seriously we take our mandate

“We take this initiative with pride and great pleasure and relief.  Our obsession is to act with correctness and transparency and be able to distribute more and more to our members worldwide.”

The CIDE one-off exclusive distribution is set to happen on the upcoming September 28th.  Sister societies should feel free to reach out to our international department for more information and details.