Tax processes can present different changes from one country to another. The laws and economy can influence how it all works. Therefore, companies that plan to expand their business abroad, or that already operate with other countries, need to be aware of how their tax system works.
Invoicing in Brazil, for example, can be a little complicated. Each city has a secretariat responsible for issuing invoices, with its own requirements and fields that must be completed. Therefore, many people are confused when they need to issue an invoice in the country.
That’s why we made this article about invoicing in Brazil, how it works, and the main terms you need to know. Keep on reading and clarify all your questions!
What is invoice?
Invoice is the receipt that proves transactions for the sale of a product or service between a company and an individual, or even between companies. Basically, it documents a transaction and also serves to collect taxes from commercial transactions. For this reason, it is a document that deserves special attention in companies of all sizes.
It is important to know that anyone who denies or fails to provide tax documents is subject to penalties and fines that can harm the growth and image of the business. The invoice is essential for companies to clarify the taxes levied on the operations carried out, making the inspection easier for the responsible authorities.
Not issuing the invoice is considered tax evasion, a crime that has harmful consequences for the enterprise in Brazil. The issuance of these tax receipts is a mandatory practice, provided for in Law No. 8,846/94.
Who should issue invoices in Brazil?
In general, any type of company that sells a product or service must issue an invoice.
Invoicing of tax documents is mandatory for businesses that contribute to the ICMS (Tax on the Circulation of Goods and Services) or to the IPI (Tax on Industrialized Products), two of the most important taxes in the country.
How invoicing in Brazil works
First, it’s necessary to have a state registration, which is obtained in the process of opening the company's National Registry of Legal Entities (CNPJ). In Brazil, the National Registry of Legal Entities is a unique number that identifies a legal entity and other types of legal arrangement without legal personality with the Brazilian Federal Revenue Service. Then, it is necessary to verify if, according to the legislation, the issuance of physical or electronic invoices is mandatory for your business.
If you are going to issue physical invoices, you have to pay attention to an Authorization for Printing Tax Documents (AIDF) to prepare the invoices. In the case of the Electronic Invoice (NF-e) it is necessary to have authorization from the State Department of Finance (Sefaz) and a management system that allows the issuance of documents.
Each state has its own Sefaz, so you have to register your company on their website. In most cases, it is necessary to use a digital certificate to ensure the legal validity of electronic invoices.
This electronic document works like a digital signature, allowing you to access government systems and guarantee the authenticity of online transactions.
To issue an electronic invoice step by step, you will need an issuer software. It can be free, like the version offered by Sefaz, or its own version acquired by the company.
Types of invoice
There are different types of invoice in Brazil, and it’s crucial to understand how each one of them works.
Electronic Invoice (NF-e)
The Electronic Product Invoice (NF-e) is a digital document that formalizes the sale of products and services, whether in the physical or digital environment. It replaces the huge amount of paper that was needed to issue manually.
You must have heard of those old pads of paper that required hours and hours of work. In addition to them, it was necessary to have adequate space for storage and still spend on stock and printing.
The NF-e Project aims to implement a Brazilian model of electronic tax document that will replace the current system of issuing the paper tax document, with legal validity, by the digital signature of the sender, simplifying the ancillary obligations of taxpayers. and allowing, at the same time, the real-time monitoring of commercial operations by the Tax Authorities.
Electronic Service Invoice (NFS-e)
The Electronic Service Invoice is a type of electronic invoice that must be used when you provide a service of any kind, such as medical clinics, schools, gyms and consultancies in general.
Therefore, it is a document that formalizes the transaction between buyer and seller, whether in the physical or digital environment. The NFS-e can still be used as a receipt and has legal and fiscal validity.
Electronic Consumer Invoice (NFC-e)
The Electronic Consumer Invoice is a type of electronic invoice issued to the final consumer. Some of its objectives are to offer greater agility in the transfer of tax information and to facilitate inspection and fight against evasion.
The NFC-e eliminates the sales invoice to the consumer, model 2, and the tax coupon, documents that were previously used and are less modern.
The complementary invoice is used when the issuer makes a mistake in filling in the quantity of products, the value of the goods or the tax rate, for example. It can only be used when the triggering event has already occurred (which depends on the operation) and there has been no return.
It should only be used if the values of the NF-e issued are smaller than the correct value, as its function is to “complement” something that was declared as smaller.
Electronic Bill of Lading (CT-e)
The Electronic Bill of Landing is a mandatory document for when there is provision of transport service. The CT-e is essential to guarantee and speed up the movement of items in any way of transportation (rail, waterway, air, road and pipeline).
The invoicing of the Electronic Bill of Lading is an obligation of the cargo carrier.
Electronic Tax Document Manifest (MDF-e)
The Electronic Tax Document Manifest (MDF-e) is also used for cargo movement, however, in interstate transport (between two or more states). Over time, some states are requiring MDF-e in internal operations, such as São Paulo, Mato Grosso do Sul and Paraná.
Terms you must know about invoicing in Brazil
The tax system involves a lot of terms that you have to understand. Therefore, we separated a few of them so you can start to comprehend how it works. Check it out:
COFINS (Contribution to Social Security Financing)
COFINS is a federal tax calculated through the gross revenue of companies. The collection of this tax goes to social assistance, public health and welfare funds in Brazil.
CSLL (Social Contribution on Net Income)
CSLL is another federal tax, and all legal entities domiciled in Brazil must declare it.
ICMS (Tax on the Circulation of Goods and Services)
ICMS is a tax levied on the value of goods and the provision of services between states or under an export regime. Is one of the most important taxes of the country.
DIFAL (Rate Differential)
DIFAL is a state tax on ICMS. It is calculated according to the differences between each state's tax rates (interstate transactions).
IE (State Registration)
IE is a taxpayer registration in the ICMS (State Revenue) registry.
ISS (Tax on Services of any nature)
ISS is a tax levied by municipalities and the Federal District. This means that all amounts collected as ISS are destined for municipal public coffers. Its incidence occurs in cases where a service is provided.
IPI (Industrialized Product Tax)
IPI is a federal tax on industrialized products (domestic or imported).
IRPJ (Corporate Income Tax)
IRPJ is an income of the kind that exists in several countries, in which each taxpayer, whether individual or legal entity, pays a certain percentage of his income to the government, national or regional, depending on each jurisdiction
Invoicing in Brazil: how to do it in an easier way
We know that invoicing in Brazil is not the easiest of jobs. There are a lot of taxes, rules, laws and institutions that are involved in the process, along with the requirements of each state to issue an invoice.
But we have good news for you! To make your life a lot easier, we developed a solution that makes invoicing automatic. That's right - with eNotas, you don’t have to worry about issuing invoices manually, filling out fields and depending on the SEFAZ system. We do it for you, automatically.
The eNotas solution is also integrated with multiple platforms, such as Hotmart. This way, every time you sell a product or a service, the sale goes directly to the eNotas platform, and the invoicing is completed.