A performance bonus is only excluded from social security contributions if the company proves that the target was exceeded.
The Receita Federal (Brazilian Federal Revenue Service) has revised its understanding on performance bonuses. The act is Solução de Consulta Cosit No. 10/2026 (a binding tax ruling issued by the General Taxation Coordination Office), published on 3 February 2026. In practice, a bonus paid to an employee for performance above what was expected falls outside the basis of assessment for social security contributions. To that end, the company must meet certain conditions and evidence the figures.
Four conditions for the performance bonus to fall outside the contribution
The rule applies as from 11 November 2017, with the labour reform introduced by Law No. 13,467/2017. Law No. 8,212/1991 defines the basis of assessment for contributions. Since the reform, a bonus granted at the employer’s discretion does not form part of that basis. The Receita Federal, however, sets out requirements:
- The bonus is paid only to employees, whether individually or collectively. Self-employed contributors are excluded.
- It may be paid in cash, goods or services.
- It may not arise from a legal obligation or from an arrangement that removes the employer’s discretion.
- It must arise from performance above what is ordinarily expected.
How the company proves performance above what was expected
The fourth condition requires objective evidence. The employer must demonstrate what level of performance was expected. It must also show by how much the result exceeded that target. For example, a company that rewards sales must record the ordinary target and the figure actually achieved.
In addition, a bonus provided for in a rule that makes it mandatory loses its discretionary nature. For that reason, the design of the programme carries as much weight as the amount paid. In our view, internal regulations and records deserve review, in order to verify whether they meet all of these conditions.
Limit of two payments per year in 2017 and 2018
There was a transitional rule. Between 14 November 2017 and 22 April 2018, the bonus was only excluded from the basis of assessment if it did not exceed two payments per year. Anyone who made more payments during that period may have contributions to pay. The Receita Federal, however, did not extend that limitation to subsequent periods.
As a next step, the company should review the bonuses paid in recent years. It should then separate those for which there is evidence that the target was exceeded from those for which there is not.
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