Income derived from the production of software and related services is exempt from IRAE, provided that the following requirements are met:
1. The assets resulting from research and development activities in these areas are covered by the regulations for the protection and registration of intellectual property.
2. The services are performed at least partially in the country. If the service was partially rendered in the country, the exoneration will be determined by applying a quotient based on the expenses and direct costs incurred in the country or abroad for the rendering of these services. The numerator will consider the direct expenses and costs incurred by the developer and services with non-related parties (resident or non-resident), or with resident related parties increased by 30%, while the denominator will consider the total direct expenses and costs to develop each asset and the expenses and costs for the concession of use or acquisition of intellectual property rights as well as the services contracted with non-resident related parties.
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3. Income from activities carried out in the national territory shall be exempted in its entirety. For such purposes, it will be considered that the taxpayer carries out its activities in the national territory when the amount of the direct expenses and costs incurred in the country for the rendering of such services exceeds 50% of the amount of the total direct expenses and costs incurred in the fiscal year for the rendering of such services and that human resources are employed on a full-time basis, in accordance with the services rendered (qualified and adequately remunerated). Regulations: Title 4 of T.O. 1996, Decree No. 150/007.
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