The Withholding Income Tax Return (DIRF) is mandatory to individuals and legal entities – regardless of the taxation type before income tax – who have paid or credited earnings with withholding tax, even if it was only in a single month in the year 2020.

 

The return is sent over the internet and, in the case of legal entities, a valid digital certificate is needed, except for companies covered by Simples Nacional (Simplified taxation system). For individuals, there is also no need for a digital certificate.

Earnings that must appear in the DIRF

The persons required to submit the DIRF must inform, in addition to the beneficiaries whose earnings has been subject of withholding income tax, CSLL (Social Contribution on Net Income), PIS (Social Integration Plan) or COFINS (Contribution for Social Security), the beneficiaries classified under the following conditions, even if they had no withholding tax:

1. on earnings from salaried work, when the amount paid during the calendar year is equal to or higher than twenty-eight thousand, five hundred and fifty-nine Brazilian Reais and seventy cents (R$ 28,559.70), including the Christmas Bonus;

2. on work without employment relation, rents and royalties, above six thousand Brazilian Reais (R$ 6,000.00), paid during the calendar year;

3. from supplementary pension plans and life insurance plans with survival coverage clause – Life Free Benefit Generator (VGBL), paid during the calendar year;

4. from income earned by residents or domiciled abroad, including cases of exemption and zero rate, referred to in line “c” of item II of art. 2 of Normative Instruction RFB No. 1.990, of November 18, 2020, which total annual value has been equal or higher than twenty-eight thousand, five hundred and fifty-nine Brazilian Reais and seventy cents (R$ 28,559.70), as well as the respective IRRF;

5. from income sent by individuals and legal entities domiciled in the country to cover personal expenses, abroad, of individuals residing in the country, on tourism, business, service, training or official missions trips, as well as the respective IRRF, which total annual value was equal to or higher than twenty-eight thousand, five hundred and fifty-nine Brazilian Reais and seventy cents (R$ 28,559.70), as well as the respective IRRF;

6. from exclusive pension income, equal or higher than twenty-eight thousand, five hundred and fifty-nine Brazilian Reais and seventy cents (R$ 28,559.70), as well as the respective IRRF, paid with exemption from Income Tax Withheld at Source (IRRF) when the beneficiary has cystic fibrosis (mucoviscidosis), active tuberculosis, mental alienation, multiple sclerosis, malignancy, blindness, leprosy, irreversible and disabling paralysis, severe heart disease, Parkinson’s disease, ankylosing spondyloarthritis, severe nephropathy, severe nephropathy, severe liver disease, advanced stages of Paget’s disease (deforming osteitis), radiation contamination or acquired immunodeficiency syndrome, except for that resulting from professional illness, regularly confirmed by an expert report issued by the official medical service of Brazil, the states, the Federal District or municipalities;

7. of earning exclusive of retirement or retirement income, equal or higher than twenty-eight thousand, five hundred and fifty-nine Brazilian Reais and seventy cents (R$ 28,559.70), as well as the respective IRRF, paid with exemption from IRRF, provided that motivated by an accident at work, or that the beneficiary has cystic fibrosis (mucoviscidosis), active tuberculosis, mental alienation, multiple sclerosis, malignancy, blindness, leprosy, irreversible and disabling paralysis, severe heart disease, Parkinson’s disease, ankylosing spondyloarthritis, severe nephropathy, severe liver disease, advanced stages of Paget’s disease (deforming osteitis), radiation contamination or acquired immunodeficiency syndrome, regularly confirmed by an expert report issued by the official medical service of Brazil, the states, the Federal District or municipalities;

8. from dividends and profits paid as from 1996, and amounts paid to the titular or partner of a micro or small business, except for compensation and rents, when the total annual amount paid is equal or higher than twenty-eight thousand, five hundred and fifty-nine Brazilian Reais and seventy cents (R$ 28,559.70);

9. from dividends and profits paid to the partner, whether ostensible or participant, individual or legal entity, of a Company in a Participation Account, regardless of the total annual amount paid;

10. of the exempt portion of retirement for people over 65 (sixty-five years), including the Christmas Bonus of the exempt portion;

11. from daily rates and allowances;

12. from values ​​of the financial allowance;

13. from Indemnities for Termination of Employment Contracts, including under the Voluntary Dismissal Plan (PDV), which total annual income paid is equal or higher than twenty-eight thousand, five hundred and fifty-nine Brazilian Reais and seventy cents (R$ 28,559.70);

14. from scholarship amounts paid or credited to resident physicians, pursuant to Law No. 6.932, as of July 7, 1981;

15. from earnings paid in compliance with a Federal Court decision;

16. from attorneys’ fees to prevailing party paid or credited to holders of the positions referred to in the caput of art. 27 of Law no. 13.327, as of July 29, 2016, of the causes to which Brazil, the authorities and the federal public foundations are part;

17. from income paid to immune or exempt entities for the provision of goods and services, as provided for in items III and IV of art. 4th and 3rd paragraph of art. 37 of Normative Instruction RFB No. 1234, as of 2012; and

18. other income from work, exempt or non-taxable, provided that the annual total paid is equal to or higher than twenty-eight thousand, five hundred and fifty-nine Brazilian Reais and seventy cents (R$ 28,559.70);

Filling out the DIRF must be done very carefully. Errors or omissions that compromise the income tax refund of whoever received the payment, generate a fine for the taxpayer.