With the enactment of Complementary Law No. 214/2025, CBS (Contribution on Goods and Services) will replace PIS/COFINS at the federal level, while IBS (Tax on Goods and Services) will replace ICMS and ISS at the state and municipal levels.

Currently, real estate developments are, for the most part, subject to the Special Taxation Regime (RET), with an overall tax burden of 4% on monthly revenue received, corresponding to the unified payment of IRPJ, CSLL, PIS and COFINS. For developments involving residential properties of social interest (PMCMV), the total rate is 1%.

With the tax reform, taxation will undergo a gradual but substantial change. As of 2027, CBS may be collected at a rate of 2.08% for developments in general, and 0.53% for properties qualifying under the PMCMV. These rates will apply to monthly revenue received, as will the remaining 1.92% of the RET, which will apply exclusively to IRPJ and CSLL.

In 2026, the focus is not on tax collection, but rather on adapting to the new model, with symbolic rates of 0.1% for IBS and 0.9% for CBS, with the possibility of offsetting these amounts against PIS/COFINS or even obtaining a refund. A calendar alert is important: as of August 1, 2026, following the end of the tolerance period established by the April regulations, errors in the IBS/CBS fields on invoices may already result in penalties under Article 341-G of Complementary Law No. 227/2026. This is an additional reason why real estate developers should already have their systems properly adjusted.

Real estate developers may, as of now, opt for a special tax transition regime that will ensure a CBS tax burden equivalent to that currently applied to PIS and COFINS, without the application of IBS. In return, they will not be entitled to claim IBS and CBS tax credits on development costs, nor to apply the adjustment and social reductions.

Adherence to the special tax transition regime is only possible for developments subject to the RET before January 1, 2029. Once this requirement is met and the option for the special transition regime has been formally made, CBS at rates of 2.08% and 0.53%, as applicable, will be levied on monthly revenue under Article 11-A of Law No. 10,931/2004 until full receipt of the sales proceeds for all units comprising the development, regardless of the date on which they were sold; or, in the case of construction contracts, until full receipt of the respective contract amount.

The transition regime equalizes the rates in order to preserve the current RET tax burden, postponing the definitive migration to the new tax system established by Complementary Law No. 214/2025. The developer will be responsible for deciding whether to opt in: if it does, it will have greater predictability regarding its tax burden, but will not be able to claim credits related to materials, goods and inputs, nor use social and/or adjustment reductions.

If the development does not fall under the special transition regime, it will be subject to a nominal rate of 13.25% (already taking into account the 50% reduction provided for by law), with the possibility of claiming tax credits on development costs. The application of these reductions may bring the effective rate down to lower levels.

It is essential to run the numbers, as depending on the regime adopted, whether the special transition regime or the Regular Regime, the pass-through of taxes to the final consumer may be higher or lower in one situation or the other. The RET provides stability and simplicity, making it ideal for residential and less complex projects. The Regular Regime, on the other hand, may generate long-term savings, especially for larger developments with a high volume of inputs and corporate buyers or investors.