The export of athletes is one of the few activities in which Brazil consistently ranks among the world leaders. According to a survey by the International Centre for Sports Studies (CIES), Brazil is the largest exporter of football players on the planet, and in 2024 alone there were 2,350 international transfers of Brazilian athletes, nearly twice as many as the second-ranked country. Behind almost every one of these transactions is a Brazilian sports agent or intermediary, paid by a commission from the contracting foreign club.

It is precisely this commission that the Municipality of São Paulo has persistently sought to subject to the Municipal Services Tax (ISS). Its argument contradicts both the text of Complementary Law No. 116/2003 and the case law of São Paulo’s own Court of Justice.

What the Law Says

Article 2, I, of Complementary Law 116/2003 is clear: ISS does not apply to exports of services abroad. The only exception is in the sole paragraph of the same article. It removes the exemption when the service, although contracted and paid for by a non-resident, produces its result in Brazil.

The law therefore does not require the absence of any connection with Brazilian territory. Such a requirement would be absurd, since any intermediation service rendered by a Brazilian professional will naturally involve, in some way, parties or interests located in Brazil. What the law requires is that the result occur outside the country. The result is the utility of the service: what actually benefits the party that contracted and paid for it.

The São Paulo Tax Authorities’ Interpretation

The Municipal Finance Department issued Normative Opinion SF No. 4/2016 in an attempt to define the concept of “result.” For intermediation services (item 10 of the list of services), it established that there is no export whenever one of the intermediated parties, the respective assets, or the economic interests involved are located in Brazil.

Applied to athletes’ agents, this criterion is devastating. The intermediated player is, as a rule, Brazilian, or is bound to a Brazilian transferring club. For the tax authorities, the mere presence of that party in Brazil is enough to rule out an export. This holds even if:

the contract was entered into with the foreign club,
the foreign club is the sole recipient and payer of the service, and
the economic benefit of the intermediation (the hiring of the athlete) is completed and produces effects exclusively abroad.

The problem is obvious. Taken to this extreme, no international intermediation service rendered by a Brazilian agent would ever qualify as an export. It is in the very nature of the activity that one of the parties to the intermediated relationship has a connection with Brazil. Without that connection, the foreign club would have no reason to hire a Brazilian intermediary in the first place. On this point, Normative Opinion 4/2016 does not interpret the law; it hollows it out.

The Violation of Complementary Law 116/2003

This objection concerns the hierarchy of legal norms, not merely interpretation. Under Article 146, III, “a”, of the Federal Constitution, it is for complementary law to define taxable events and the related cases of non-taxation. A normative opinion is an internal administrative act without the force of law. It cannot create a restriction that Complementary Law 116/2003 did not provide for. Nor can it replace the statutory “result” criterion with a criterion based on “the location of any of the parties or interests involved,” which is foreign to the law.

In short, the São Paulo tax authorities swap one criterion for another. The law mandates the criterion of the service’s enjoyment by the recipient. The authorities instead use the presence of any Brazilian element in the transaction, which the law does not contemplate. A sub-statutory act has no power to make that substitution.

The Municipal Tax Council Upholds the Position, Even Against the São Paulo Court of Justice

Despite the opinion’s legal weakness, São Paulo’s Municipal Tax Council (CMT) has repeatedly upheld the position set out in Normative Opinion 4/2016. The CMT is the administrative body that rules on municipal tax appeals.

The coexistence of these two lines of reasoning within São Paulo’s system, one administrative and one judicial, is uncomfortable to say the least. The CMT upholds tax assessments based on a criterion that the courts with jurisdiction over the same municipality have already rejected in similar cases.

The Same Controversy at the Superior Court of Justice

The situation is not unique to São Paulo. At the Superior Court of Justice (STJ), the debate over the scope of the term “result” has gone on for almost two decades and has yet to be settled.

On one side is the so-called result-as-completion (or result-as-performance) theory, introduced in Special Appeal (REsp) No. 831,124/RJ (2006). It equates result with physical performance. If the service was completed in Brazil, the result occurs here, regardless of who contracted it or where its economic effects fall.

On the other side is the result-as-utility (or result-as-enjoyment) theory. It was consolidated from AREsp No. 587,403/RS (2016) onward and reaffirmed in the TAP case (AgInt in AREsp 1,931,977/RS). It identifies the result with the utility actually enjoyed by the recipient, even if the service was performed wholly or partly in Brazil. In the TAP case, the STJ upheld the exemption from ISS on the repair of aircraft engines and turbines belonging to foreign airlines. Although the repairs were physically carried out in Brazil, the Court found that the service was enjoyed exclusively abroad, since that is where the repaired aircraft became available for operation.

This oscillation is telling in itself. Even within the STJ, there is no consensus on whether the statutory criterion is objective (where the service was completed) or subjective (who benefits from its useful effect, and where). What both panels have in common, however, is that they reject the even shallower criterion adopted by Normative Opinion 4/2016. That criterion holds that the mere presence of a Brazilian party or interest in the intermediated relationship is enough, on its own, to disqualify the export. None of the STJ’s precedents, not even the most restrictive toward taxpayers, extends the tax liability that far.

Application to Athletes’ Agents

Applying this framework to international sports intermediation leads to a clear conclusion. A Brazilian agent who brokers an athlete’s transfer to a foreign club renders a service whose recipient, payer and beneficiary is the foreign club itself. The result of the intermediation is the athlete’s addition to the squad, with all the legal and economic effects that follow. That result occurs, and is fully exhausted, abroad.

The athlete’s nationality and the location of the transferring club are inherent features of the export of Brazilian sporting talent. A sub-statutory act cannot turn them into an obstacle to applying Complementary Law 116/2003.

The conclusion holds even under the STJ’s most restrictive reading, the result-as-completion theory. Under that reading, one would have to identify what the “completion” of an intermediation service actually is. It is not the athlete’s training in Brazil, nor his existence as a Brazilian individual. It is the negotiation that culminates in the signing of the sports employment contract with the foreign club. That act is typically completed abroad, where the recipient is based and where the hiring takes effect.

Conclusion: Assessments That Should Be Challenged

Assessments of ISS on intermediation commissions paid by foreign clubs to Brazilian agents lack a legal basis when they rely solely on the criterion of Normative Opinion 4/2016. The opinion:

exceeds the limits of Article 2 of Complementary Law 116/2003;
adopts a criterion that not even the most pro-tax case law of the STJ has endorsed; and
is directly contradicted by precedents of the São Paulo Court of Justice itself in similar cases, including sports-related ones.

Sports agents and intermediaries assessed on this basis therefore have solid grounds to challenge the assessment administratively and, if necessary, in court. The Municipal Tax Council continues to uphold the opinion’s criterion despite the case law of the very court it answers to. That persistence does not make the tax any less unlawful. It merely shifts to the courts the burden of correcting what the administrative process is, for now, unwilling to acknowledge.

Einar Tribuci is a founding partner of Tribuci e Fonseca Advogados.

Article written for the portal https://www.reformatributaria.com
Published at: https://www.reformatributaria.com/opiniao/a-cobranca-ilegal-de-iss-pelo-municipio-paulista-sobre-sobre-a-comissao-do-agente-de-atletas-transferidos-para-o-exterior/