ISS in the Municipality of São Paulo: tax benefits for single-profession companies

The municipal law 17.719/21 brought important changes to the classification of so-called single-profession companies (SUP), defined as those where the professionals (partners, employees or not) are qualified to exercise the same activity and provide services personally, on behalf of the company, assuming personal responsibility, in accordance with specific legislation. The most common examples are those dedicated to law, auditing, and accounting.

This tax benefit ensures, in the case of properly qualified companies, a different criterion in determining the calculation basis for the ISS (fixed amounts per qualified professional), which means, in some situations, a saving of 95% in the payment of tax. On the other hand, the company is required to submit the Tax Substitution, Exemption, and Immunity Statement (D-SUP), established by the Normative Instruction of the Municipal Finance and Economic Development Secretariat – SF/SUREM No. 13 of September 18, 2015.

D-SUP is an additional obligation created by the Municipality of São Paulo for companies that benefit from tax benefits, such as exemptions, immunities, or tax reductions. The main objective is to ensure transparency and control in the use of these benefits, ensuring that they are utilized within legal limits and in a regularized manner. This is, therefore, an obligation intrinsic to the benefit received which, if not fulfilled, may result in the loss of the tax benefit and/or the application of penalties.

The D-SUP is delivered annually and is linked to the fiscal year. For the 2024 fiscal year, the delivery deadline started on September 16 and runs until December 30, 2024.

However, it is essential that companies pay attention to the specific dates published by the Municipality of São Paulo, which may vary depending on the year. The D-SUP is submitted electronically, through a specific system made available by the Municipality.

Factors that prevent classification

The classification of a single-profession company under the D-SUP (Electronic Declaration of Single-Profession Companies) can be prevented by several factors, including:

1. Corporate Structure: If the company has a legal entity as a partner or is a partner of another company, it cannot be classified as a single-profession company.
2. Diversity of Activities: The company must exclusively carry out the activity for which the partners are professionally qualified. Any other activity may prevent classification.
3. Services Outsourcing: The outsourcing of services related to the company’s main activity is also an impediment.
4. Business Structure: The company cannot be characterized as a business corporation, meaning there should be no organization of production factors that define an organized economic activity.
5. Tax Liability: Partners must assume personal responsibility for the provision of services as required by specific legislation.

These are some of the main factors that can prevent the classification of a single-profession company under the D-SUP.

It is important to highlight that monitoring of compliance with requirements is rigorous and continuous. Thus, at any time, if any of the prohibitive factors are identified, the company will be reclassified, resulting in a significant financial impact due to the amounts owed in terms of ISS (Service Tax). For example, it is enough for a firm to provide or simply offer services defined under a CNAE (National Classification of Economic Activities) different from the one used for classification. Similarly, failure to submit the D-SUP will result in reclassification, with an ISS rate ranging from 2% to 5% applied to the gross revenue, depending on the municipality. The process to request a reclassification in the following fiscal year can be quite complicated.

The correct submission of the D-SUP ensures that single-profession companies can continue to benefit from the special conditions for ISS collection. It is important, therefore, that companies remain vigilant, submitting the declaration on time and meeting the other requirements set by the legislation.