Simples Nacional vs Presumed Profit for a service company

Two regimes, two logics

Before any number, understand that Simples Nacional and Presumed Profit start from opposite ideas. Simples bundles almost every tax into a single slip, the DAS, computed on gross revenue. Presumed Profit does not treat revenue as the final base: it presumes a fraction of it is profit and taxes that margin with several separate taxes, each with its own rate and due date. Comparing the two by the final number without grasping that difference in mechanics is like comparing two cars by the price of a full tank.

Simples Nacional (LC 123/2006)

Almost all taxes in a single slip, the DAS, levied on revenue.
The effective rate grows with the trailing 12-month revenue (RBT12).
The employer social charge (CPP) is already baked into the Annex III DAS.
Fewer ancillary obligations; a R$ 4.8 million/year ceiling.

Presumed Profit

Taxes a presumed margin (32% for services in general).
IRPJ and CSLL on the presumed base; PIS, COFINS and ISS separately.
The 20% employer CPP on the pró-labore is collected separately.
More ancillary obligations; no Simples revenue ceiling.

28%Fator R that splits Annex III from Annex V

R$ 4.8MSimples annual revenue ceiling

32%services profit presumption in Presumed Profit

Simples: the two formulas that decide everything

Simples looks like a rate table, but two formulas run beneath it. The first turns the table nominal rate into the effective rate you actually pay. It lives in art. 18, §1º-A of LC 123/2006 and is what makes the real bite smaller than the band number, especially at the start of each band.

Alíquota efetiva = (RBT12 × Aliq − PD) ÷ RBT12

RBT12: gross revenue accumulated over the 12 months before the calculation month
Aliq: nominal rate of the band the RBT12 falls into (Annex III or V)
PD: deductible portion of that band, defined in each annex

The Simples effective rate (LC 123/2006, art. 18, §1º-A). The month DAS is the month revenue times this rate.

The second formula is the one almost nobody masters, and the most important for services. The Fator R decides whether the company is taxed under Annex III, the cheaper one, or Annex V, the costlier. It is the ratio of the last 12 months of payroll (which includes the owner pró-labore, the 13th salary, charges and the FGTS) to gross revenue over the same period. It sits in art. 18, §§5º-J and 5º-M of LC 123/2006.

Fator R = Folha de 12 meses ÷ RBT12 → Fator R ≥ 28% ⇒ Anexo III

Folha de 12 meses: sum of salaries, pró-labore, 13th salary, employer charge and FGTS over the last 12 months
RBT12: gross revenue accumulated over the last 12 months
28%: the legal cut: below it, Annex V; at or above, Annex III

The Fator R (LC 123/2006, art. 18, §§5º-J and 5º-M). Reaching 28% of payroll over revenue moves the company from Annex V to Annex III.

Not every service goes through the Fator R. Some are Annex III by nature (travel agencies, accounting firms as a rule); others would be Annex V but migrate to III when the Fator R reaches 28%, physiotherapy, architecture, medicine, engineering, advertising, information technology and most intellectual services. It is precisely this group that can plan the pró-labore to pay less. Compare Annex III and Annex V side by side, the first two bands show the gulf:

Simples Nacional Annexes III and V (LC 123/2006), with nominal rate and deductible portion by RBT12 band.
RBT12 band (R$/year)	Annex III, nominal	Annex III, deduct	Annex V, nominal	Annex V, deduct
Up to 180,000	6%	—	15.5%	—
180,000.01 to 360,000	11.2%	R$ 9,360	18%	R$ 4,500
360,000.01 to 720,000	13.5%	R$ 17,640	19.5%	R$ 9,900
720,000.01 to 1,800,000	16%	R$ 35,640	20.5%	R$ 17,100
1,800,000.01 to 3,600,000	21%	R$ 125,640	23%	R$ 62,100
3,600,000.01 to 4,800,000	33%	R$ 648,000	30.5%	R$ 540,000

RBT12: Total gross revenue of the 12 months before the calculation month. It sets the table band and, through the formula, the effective rate.
Fator R: The 12-month payroll divided by the RBT12. From 28% up, a service company is taxed under Annex III instead of Annex V.
Pró-labore: The owner pay for working in the company. It counts in the Fator R payroll and bears INSS (11%) and IRRF, but it is still the owner money.
DAS: The Simples Nacional collection slip: the single monthly document that gathers the regime taxes, computed by the effective rate on the month revenue.

Presumed Profit: how the taxes stack up

In Presumed Profit there is no single slip. The law presumes that 32% of service revenue is profit (Law 9,249/1995, art. 15, §1º, III) and charges IRPJ and CSLL on that presumed base. Alongside, PIS and COFINS fall on revenue under the cumulative regime, and the ISS is municipal. The table below shows each piece and its cost for a service company billing R$ 20,000 per month.

Presumed Profit composition for services, with the monthly amount at R$ 20,000 of revenue. Federal ≈ R$ 2,266; with a 5% ISS, ≈ R$ 3,266 (16.3% of revenue).
Tax	Base	Rate	At R$ 20k/month
IRPJ	32% of revenue (presumed)	15% (+10% above R$ 20k/month of profit)	R$ 960
CSLL	32% of revenue (presumed)	9%	R$ 576
PIS	Revenue (cumulative)	0.65%	R$ 130
COFINS	Revenue (cumulative)	3%	R$ 600
ISS	Revenue	2%–5% (municipal)	R$ 400 – R$ 1,000
Total (with 5% ISS)	% of revenue	13.3% – 16.3%	≈ R$ 3,266

The federal part alone, IRPJ and CSLL on 32%, plus PIS and COFINS on revenue, adds up to R$ 2,266 a month, or 11.33% of revenue. With the ISS, the total sits between 13.3% (2% ISS) and 16.3% (5% ISS). And that is still before INSS: in Presumed Profit the company pays the 20% employer contribution on the pró-labore separately, something Annex III of Simples already bakes into the DAS. That CPP is one of the quiet reasons Presumed Profit weighs more on anyone who draws a pró-labore.

The Fator R is the service company lever

Here is the result that sounds wrong the first time: paying yourself more can make the company pay less tax. The reason is the Fator R. While it stays below 28%, the company is in Annex V and a bigger pró-labore only adds INSS and IRRF, with no upside. The moment payroll hits 28% of revenue, the company jumps to Annex III and the effective rate collapses. The chart below plots the total tax burden (DAS plus INSS and IRRF on the pró-labore) for a company billing R$ 20,000/month, varying only the pró-labore. Watch the cliff.

Total tax burden as a % of revenue, for a fixed R$ 20,000/month billing (RBT12 of R$ 240,000). The Fator R crosses 28% at a pró-labore of R$ 5,600: up to there the company is in Annex V (~16%–20%); crossing it, the company jumps to Annex III and drops to 11.5%. Then it climbs again, because the extra pró-labore only adds INSS and IRRF. The minimum sits exactly at the 28% cut.

View the data

x	Value
0	16.13%
2,000	17.23%
4,000	18.33%
5,000	18.88%
5,500	20.11%
5,600	11.52%
6,000	12.5%
8,000	16.95%
10,000	19.89%

The curve tells the whole story. Inside Annex V, raising the pró-labore from R$ 4,000 to R$ 5,500 only worsens the burden (from 18.3% to 20.1%), because the DAS does not move while INSS and IRRF grow. But on reaching R$ 5,600, exactly 28% of R$ 20,000, the company enters Annex III and the burden plunges to 11.5%. That is the sweet spot: pay just enough pró-labore to touch the 28% and not a real more, because every real above it starts adding INSS and IRRF again without cutting the DAS. Going from R$ 6,000 to R$ 10,000 pushes the burden from 12.5% back up toward 20%.

See it in round numbers. At the same R$ 20,000/month revenue, a R$ 3,000 pró-labore gives a Fator R of 15%: Annex V, a 16.125% effective rate, a R$ 3,225 DAS. Adding R$ 330 of INSS and R$ 0 of IRRF, the total tax is R$ 3,555/month. Now raise the pró-labore to R$ 6,000: a Fator R of 30%, Annex III, a 7.3% effective rate, a R$ 1,460 DAS. INSS becomes R$ 660 and IRRF R$ 380.02; the total tax falls to R$ 2,500.02/month. The DAS dropped R$ 1,765; the larger pró-labore cost R$ 330 more of INSS and R$ 380.02 of IRRF. Net: R$ 1,054.98 less tax per month, R$ 12,659.76 per year, and the owner still takes R$ 3,000/month more home.

Reproduce the example and test your own: change the billing and the pró-labore and watch the Fator R, the annex and the DAS move in real time.Open the tool full page

Simples or Presumed Profit: when each wins

With both gears exposed, the comparison is direct. Put the two regimes at the same R$ 20,000/month billing. Simples in Annex III pays R$ 1,460 of DAS. Presumed Profit adds up to R$ 3,266 (IRPJ R$ 960 + CSLL R$ 576 + PIS R$ 130 + COFINS R$ 600 + ISS of R$ 1,000 at 5%) and still collects the employer CPP on the pró-labore separately. Simples wins comfortably. Even Annex V (R$ 3,225 of DAS) merely ties Presumed Profit. In short: Presumed Profit only competes when the company is stuck in Annex V with a low Fator R, breaches the Simples ceiling, or has a cost structure that changes the math.

Simples usually wins when…

The service company reaches Annex III through a 28% Fator R.
Revenue is low or mid and fits the R$ 4.8 million ceiling.
The margin is high: Simples taxes revenue, not actual profit.
The owner wants fewer ancillary obligations and a single slip.

Presumed Profit can win when…

The activity is stuck in Annex V with a low Fator R.
Revenue passes the R$ 4.8 million Simples ceiling.
The real margin is low and the 32% presumption beats the actual profit.
The activity has a reduced presumption (e.g., 8% for hospitals).

The R$ 3.6 million state sublimit

The Simples ceiling is R$ 4.8 million/year, but there is a R$ 3.6 million sublimit just for ICMS and ISS, kept for 2026 by Ordinance CGSN No. 54/2025. Once past R$ 3.6 million, the company stays in Simples for federal taxes but pays ICMS and ISS separately, under the normal regime. In practice, the DAS stops being a single slip and the Simples advantage shrinks well before billing reaches the R$ 4.8 million ceiling.

Why the real margin matters so much

Simples and Presumed Profit tax revenue or a presumption of it, not the profit left over. If you bill a lot and spend little (high margin), the Simples effective rate bites a small slice of your real profit. If you have high costs and a thin margin, the 32% presumption can end up taxing a profit you never made, and then it is worth comparing with Actual Profit (Lucro Real), which taxes real profit and lets you deduct expenses. This guide covers only Simples and Presumed Profit; very low margins call for the Lucro Real analysis.

What changed in 2026: dividends and reform

A good part of the advantage of being a company came from one detail: after paying the company tax, the owner distributed profit to the individual with no further income tax. In 2026 that rule gained a ceiling. It is worth understanding exactly what changed, because many people overstated the law reach.

The dividend exemption is no longer unconditional

Law 15,270/2025 (the sanctioned PL 1,087/2025), in force since Jan 1, 2026, created a 10% withholding on profits and dividends paid by a single company to a single individual when the monthly amount exceeds R$ 50,000. There is also a minimum tax (IRPFM) for individuals whose total income tops R$ 600,000/year, reaching 10% from R$ 1.2 million/year. Profits earned through 2025 and approved by Dec 31, 2025 remain exempt under the transition rule.

For this guide target, a service company billing around R$ 20,000/month, dividends stay well below R$ 50k/month and total income below R$ 600k/year. In practice, profit distribution stays exempt. What changed is that it is no longer a blank check: above those ceilings, the old plan of pulling everything out as exempt dividends no longer works.

2006Simples Nacional is born
LC 123/2006 creates the unified regime for micro and small companies, with the DAS as a single slip.
2018The effective rate and the Fator R arrive
LC 155/2016, in force since 2018, rewrites the annexes and creates the effective-rate formula and the 28% Fator R.
2023The tax reform is approved
EC 132/2023 sets up CBS and IBS to replace PIS, COFINS, IPI, ICMS and ISS over a transition running to 2033.
2026Dividends and the reform test phase
Law 15,270/2025 begins taxing dividends above R$ 50k/month; CBS (0.9%) and IBS (0.1%) enter testing, with no effective collection.

Does the tax reform (CBS/IBS) change this math?

Not yet in 2026. This is a test year: CBS shows up at 0.9% and IBS at 0.1% only for the record, with no effective collection. CBS (replacing PIS, COFINS and IPI) truly starts in 2027; IBS (replacing ICMS and ISS) is phased in from 2029 to 2033. For Simples, the reform foresees a specific regime: the opting company stays on the DAS but may choose to collect CBS and IBS separately to generate credits for clients who need them. Since the new system reference rates are not yet settled, treat the 2026 Simples vs Presumed Profit comparison as valid for 2026 and revisit it at each change.

Is the minimum pró-labore still worth it?

It depends on the Fator R. Someone already comfortably in Annex III without effort need not inflate the pró-labore. Someone stuck in Annex V should compute how much pró-labore brings payroll to 28% and weigh the DAS savings against the extra INSS and IRRF, which is what the example showed: going from R$ 3,000 to R$ 6,000 saved R$ 1,054.98/month. Add the long-term INSS effect: contributing more today can mean a larger benefit tomorrow. To size the net of your own pró-labore, use the net salary calculator and the INSS rates guide.

One last practical piece: none of this works without issuing invoices. Every service rendered needs its matching invoice, which feeds the gross revenue that in turn defines the RBT12 and the Fator R. If you still handle that by hand, the invoice generator helps standardize billing. And to understand how the pró-labore becomes money in the individual account, see how to compute net salary and the IRRF calculation base. Whoever invests what the company leaves over can check the effect of contributions in the compound interest guide.

Frequently asked questions

What is the Fator R and why does it matter?

It is the ratio of the last 12 months of payroll (salaries, pró-labore, 13th salary, charges and FGTS) to gross revenue over the same period. For services, a Fator R of 28% or more places the company in Annex III (a 6% starting rate) instead of Annex V (15.5%). It is in art. 18, §§5º-J and 5º-M of LC 123/2006.

Does raising the pró-labore really cut the tax?

It can, when the larger pró-labore makes the Fator R cross 28% and moves the company from Annex V to Annex III. In the guide example, raising the pró-labore from R$ 3,000 to R$ 6,000 on a R$ 20,000/month revenue dropped the DAS from R$ 3,225 to R$ 1,460 and the total tax from R$ 3,555 to R$ 2,500.02, a R$ 1,054.98/month saving. Above the 28% point, though, the extra pró-labore only adds INSS and IRRF.

Is profit distribution still exempt in 2026?

For most small providers, yes. Law 15,270/2025 began charging a 10% withholding only on dividends above R$ 50,000/month paid by a single company, and created a minimum tax for individuals earning over R$ 600k/year. Below those limits, distribution stays exempt. It just stopped being unconditional.

Is the Presumed Profit base 32% for every service?

Most services use 32% (Law 9,249/1995, art. 15, §1º, III). There are exceptions: hospitals and some health services with hospital structure may use 8%. Confirm your activity percentage with an accountant before deciding.

What is the Simples Nacional revenue ceiling?

The ceiling is R$ 4.8 million of gross revenue per year. But there is a R$ 3.6 million sublimit just for ICMS and ISS: once past it, the company stays in Simples for federal taxes but collects ICMS and ISS separately, under the normal regime. Above R$ 4.8 million, it leaves Simples.

Is Simples always cheaper than Presumed Profit?

No. For most small providers in Annex III, yes. But at high revenue, stuck in Annex V, or with a very low margin, the company can pay less in Presumed Profit, or even in Actual Profit. It depends on the specific numbers: run both at your billing before deciding.

For a service company, the game is usually to beat the Fator R and stay in Simples Annex III: paying just enough pró-labore to touch the 28% of payroll over revenue is what drops the effective rate and minimizes tax, no more, no less. Presumed Profit only competes at high revenue, when Annex V weighs or the margin is low. And remember that, since 2026, profit distribution is exempt only up to R$ 50k/month per company. Run the numbers for your case in the CLT vs PJ calculator and finalize the decision with an accountant.

Sources & references

Brazilian financeINSS 2026: how the progressive contribution rates and the effective rate workThe 14% rate does not apply to your whole salary. See how Brazil’s INSS contribution is charged by brackets in 2026, why the effective rate is always lower, and why above the ceiling the deduction turns regressive, with worked examples, a formula and a chart.Brazilian financeIRRF withholding: taxable base, the deductible portion and deductionsIRRF is not charged on gross salary. This guide derives the deductible portion step by step, shows the 2026 monthly table, the R$ 5,000 exemption of Law 15,270/2025, the simplified discount, RRA and the 13th salary, with the arithmetic in full.Brazilian financeHow to calculate net salary in Brazil: the order of operationsFrom gross to net without getting the order wrong: progressive INSS by brackets, the IRRF base (gross − INSS − dependents − alimony), IRRF with its deductible portion and the exemption up to R$ 5,000. 2026 tables, formulas and two worked examples.InvestingCompound interest, contributions and inflation: the exponential your intuition reads as a lineCompound interest is an exponential, and nearly every gut-feel error comes from treating it as a straight line. This guide derives compounding, the annuity formula and the real return net of tax and inflation (the Fisher effect), with a chart, the tax table and two hand-worked examples.