SÃO PAULO CITY COUNCIL PUBLISHES NORMATIVE OPINION ON THE INCIDENCE OF ISS

The Regulatory Opinion SF No. 1, dated 7/18/2017, was released today (19.7.2017) in the Official Gazette of the Municipality of São Paulo (“DOM / SP”), which deals with the incidence of ISS on services of licensing or assignment of right of use of computer programs or by electronic transfer of data, or when installed on external server.

According to the understanding expressed in said document, the licensing or assignment of use of computer programs by any means (physical support, download or Software as a Service – SaS), regardless of whether the software is customized to the specific needs of the buyer, are considered services within the scope of sub-item 1.05 (“licensing or assignment of right of use of computer programs”) of the List of Services contained in art. 1 of Law 13701/2003.

Specifically regarding SaS, the mentioned Normative Opinion also establishes that there is no impairment to the framing of part of its contracting in sub-items 1.03 (“data processing and similar”) and 1.07 (“technical support in computing, including installation, configuration, and maintenance of computer programs and databases “) of said List of Services.

According to art. 3 of the aforementioned Normative Opinion, its provisions are interpretive, therefore, applying retroactively, being binding upon the organs of the Finance Department of the Municipality of São Paulo, in addition to revoking all Consultation Solutions issued prior to its publication.

It is worth remembering that this understanding has already been presented in previous opportunities through Consultation Solutions in which the incidence of ISS was affirmed even in cases of commercialization of so-called standardized shelf software.

Such an understanding, however, is already the subject of judicial inquiries, given the existence of precedents that affirm the incidence of ICMS on these types of shelf software, because they fall within the concept of merchandise.

In this way, taxpayers who have not yet discussed this thesis can file lawsuits to avoid such an understanding of São Paulo City Council.