Tax reform could double taxes paid by architecture firms

As the implementation of tax reform progresses, architecture firms must pay extra attention: the introduction of VAT could increase the total rate by more than 10 percentage points. The changes brought about by the reform could double the final rate in certain cases.

This increase will occur even with the 30% discount granted to architecture companies in the Value Added Tax (VAT) rate – the benefit was approved by the National Congress during the processing of the complementary law that regulates the reform.

Despite the promise of simplification, the new model still brings uncertainties and risks that require careful tax planning, especially with regard to competitiveness between regimes.

Architecture companies that remain in the Simples Nacional, for example, may lose ground compared to those that opt ​​for regimes such as presumed or real profit.

The reform foresees that current taxes will be gradually replaced by two new taxes. Starting in 2027, the Contribution on Goods and Services (CBS) will replace PIS and Cofins. The Tax on Goods and Services (IBS) will take the place of ICMS and ISS between 2029 and 2033.

Although the estimated VAT rate, which is the sum of the CBS and the IBS, is 28%, during the processing of the project, Congress established a ceiling of 26.5% to limit the total burden.

Based on this ceiling, tax lawyer Eduardo Natal, master in Tax Law and president of the Tax Transaction Committee of the Brazilian Tax Law Association (ABAT), projects that the rate for architecture companies could jump from the current 5.3% to 8.3% (depending on the ISS of each municipality) to around 18.55%.

The calculations above do not consider the incidence of 4.8% IRPJ and 2.88% CSLL. Considering both taxes, which were not affected by the tax reform, the final tax rate for architecture firms will go from the current 13% to 16% to 26.23% – an increase of at least 10 percentage points.

In the case of architectural firms that remain registered under Simples Nacional, there are no changes. The tax reform maintained the same current dynamics, since the ICMS/ISS and PIS/Cofins rates of the regime were preserved, changing only the nomenclature in DAS to IBS and CBS (Dual IVA).

Still, due to the staggered implementation, Eduardo Natal recommends that taxpayers monitor any changes to the Simples criteria and limits throughout the transition period, which runs until 2033.

Simple Hybrid requires new calculation and may increase tax

A new feature for those who opt for the Simples Nacional is the creation of an alternative taxation model: the Simples Híbrido. Although presented as optional, this regime represents a profound change in the collection logic and requires strategic evaluation.

In the Hybrid Simples, VAT payments will no longer be unified in the DAS form and will be made separately, using a separate form, with the full rate being applied. In practice, this implies a significant increase in the tax burden.

According to the consultancy firm Contabilizei, the average tax rate for professionals in the Simples is currently 6%, considering the first bracket of Annex III (revenue of up to R$180 thousand per year). This percentage includes IRPJ and CSLL, plus PIS, Cofins, CPP and ISS, which are equivalent to approximately 2.95%.

With the new model, even applying the 30% discount provided for the category, the estimated VAT is 18.55% – that is, a jump of 15.6 percentage points in relation to the current rate (2.95%). Thus, architecture companies that opt ​​for the Simples Híbrido will have to pay almost six times the current rate. However, there is one factor that may favor the choice of this model: the possibility of taking advantage of tax credits.

Higher tax rate, more credits for architecture companies in tax reform

The main argument in favor of the Simples Híbrido is the potential for generating tax credits. According to Charles Gularte, executive vice president of Contabilizei, the credits generated in this model will correspond to the full amount of VAT – or 18.55%.

However, for companies that remain under the Simples regime, these credits will be considerably smaller, as they will correspond only to the fraction of the VAT included in the DAS. As shown above, the percentage is approximately 2.95% of the invoice value.

For companies whose clients are entitled to credit offsetting — such as offices, construction companies or developers — this difference can be decisive. An architect who remains in the Simples regime may generate less attractive credit, which makes his service more expensive compared to competitors who adopt the Simples Híbrido regime.

In other words, in addition to assessing the nominal rate, it will be necessary to calculate the impact on the customer's perception of value. It will be necessary to consider whether paying the higher tax may, paradoxically, represent a commercial advantage by generating larger credits and increasing the company's competitiveness.

Strategic assessment is essential for architecture firms in light of tax reform

As in other sectors already analyzed by Gazeta do Povo , such as doctors and lawyers , the tax reform imposes on companies the need to make a careful assessment of the best regime to adopt.

In the case of architecture firms, choosing the alternatives offered by tax reform can mean the difference between winning or losing contracts, especially for clients who operate with tight margins and are highly sensitive to tax costs.

Although the reform was sold as a step forward towards simplification, its final design still carries a high degree of complexity and an asymmetrical impact between tax regimes, demanding a strategic and long-term vision on the part of taxpayers.