With the enactment of Complementary Law No. 214/2025, which regulates Brazil’s Tax Reform, the scenario changes substantially. The replacement of taxes such as ICMS, ISS, PIS, and COFINS with two new levies—the Contribution on Goods and Services (CBS) and the Tax on Goods and Services (IBS)—represents not merely a simplification of the system, but a deep restructuring of the country’s existing fiscal logic.
Currently in Brazil, a solar photovoltaic energy project operating under the distributed generation model faces a relatively favorable tax environment. A consumer who installs a solar system in their home or business pays taxes such as ICMS, PIS, and COFINS only on the energy consumed from the grid—that is, when the system does not generate enough power to meet the demand. The surplus energy generated and injected into the grid is compensated through credits, and this compensation is exempt from those taxes in many states. Additionally, a tariff for the use of the distribution infrastructure—known as the “Fio B” charge—has been applied to new systems since 2023, in accordance with ANEEL Normative Resolution No. 1,000/2021. This tariff has become an increasingly significant cost factor, particularly for small-scale generators.
With the enactment of Complementary Law No. 214/2025, which regulates the Tax Reform, the fiscal framework undergoes a major transformation. The replacement of taxes such as ICMS, ISS, PIS, and COFINS by CBS and IBS represents more than a simplification—it is a shift in the foundational structure of the tax system. The combined rate of these new taxes may exceed 26.5%, depending on the federal and state components, which is expected to raise the current tax burden, particularly in states that previously granted aggressive incentives for renewable energy projects.
To illustrate: today, a solar generator may be subject to an effective tax burden below 15% of its operational revenues, considering state incentives and simplified tax regimes such as presumed profit. Under the new tax framework, this burden tends to increase, especially for asset leasing operations (such as solar plant leasing contracts), with estimated rates reaching 10.6%—even after applying the 60% tax reduction for specific activities. Additionally, consumers who currently benefit from full credit compensation may lose part of that advantage if future regulations impose partial taxation on compensated energy.
Given this scenario, reviewing contracts within the sector becomes not just advisable—but strategic. Split payment clauses gain importance, allowing the contracting party to pay taxes directly to the public treasury. A sample provision might be: “The Parties agree that, for tax compliance purposes, payment of the consideration shall be made in two installments: (i) the net amount owed to the contractor; and (ii) the amount corresponding to IBS and CBS, to be remitted directly to the competent tax authority, in accordance with applicable legal guidelines.”
Another key clause is the change in law provision, which ensures that future legislative developments—such as reinterpretations of CBS or IBS—do not undermine the economic-financial balance of the agreement. For example: “If there is a legislative, regulatory, or interpretative change that alters the tax charges applicable to this agreement, the Parties shall renegotiate in good faith to restore the original economic balance of the contract.”
It is also essential to include hardship and economic rebalancing clauses, considering the long-term financial impact that the new tax model may create. For instance: “In the event of unforeseen and extraordinary circumstances, such as significant tax changes that excessively burden one of the Parties, the affected Party may request a contractual revision by providing evidence of the resulting imbalance.”
Given the increasing regulatory and fiscal complexity, Dispute Board Resolution clauses or other forms of alternative dispute resolution become crucial to prevent lengthy litigation over technical or tax-related issues. A recommended clause might be: “The Parties agree to establish a Dispute Resolution Committee (Dispute Board) composed of three independent members, with preventive and adjudicative authority throughout the term of the contract. Any tax or contractual disputes shall first be submitted to the Committee, whose decision shall be binding unless otherwise agreed.”
In summary, the Tax Reform affects more than just the fiscal regime—it reshapes the contractual architecture of the energy sector. Solar energy will remain a strategic component of Brazil’s energy transition, but its competitiveness will increasingly depend on a new kind of innovation—legal, fiscal, and contractual. The transition ahead is not solely about energy. It is, above all, about contracts.
