Taxation of business consortia: how is it done?

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A common question among businesspeople participating in consortia concerns the tax aspect. After all, how are business consortia taxed, since there is no legal personality in this format?

First of all, it is important to clarify that a business consortium is an organizational model in which two or more companies come together to carry out a project or participate in a specific business purpose – carrying out a project, participating in bids, providing services, etc.

The formation of a consortium is done in a structured, agreed manner, so that all issues relating to the administration of the consortium (for example, responsibilities of the consortium members and revenue sharing) are set out in a contract signed between the participating companies.

In relation, for example, to the promotion of courses kenya telegram data for members, non-members and rental income, in relation to Cofins, it is worth highlighting the recent understanding of the Federal Revenue Service when in Consultation Solution No. 120 of June 2023 :

“ There is an exemption from Cofins on revenues arising from the association’s own activities, understood as those arising from the contributions of members, according to the bylaws, and those arising from the payment of the course taken by participating members and non-members. There is an exemption from Cofins on revenues arising from the rental of assets, provided that the rental is intended for the execution of activities linked to the entity’s main purposes. ”

The consortium has a set duration, that is, it ends with the execution of the project or purpose for which it was created. Although its registration with the CNPJ (In SRF 1/2000) has become mandatory, the consortium does not have its own legal personality, which leads to the following question: “How are its obligations and tax liability defined?”