The non-incidence of ISS on Image Rights Contracts

The Federal Constitution, in its article 5, item X, provides for image as a personality right, which differs due to the fact that it is available on the part of its holder, which can allow its exploitation.

In effect, legal protection of the image is fundamental, as it preserves the defense of essential components of the personality and, simultaneously, the respective assets of the individual, taking into account the economic value it represents. In the case of professional football athletes, the transfer of image should not be confused with the object of their main contract, that is, the special sports employment contract. In general terms, the main purpose of the special sports employment contract is the athlete's participation in competitions, training, concentration, travel, preservation of their physical conditions, in accordance with the standards and rules described in Law 14,597/23. In turn, the Image Rights Assignment Agreement has as its object a different legal relationship, serving with the purpose of authorizing and remunerating the time in which the athlete's image will be linked to advertising campaigns of the club in question, with the purpose of attract members and sponsors, sell sporting equipment, accessories, as well as promote the club in commercials, testimonials, magazines, websites, appearances at events, among others. Thus, the mandatory provision due for the Assignment of Use of the Image Right consists of an obligation to give, that is, the delivery of the Image Right to the Licensee for a determined period, not requiring any obligation to do so, and cannot, therefore, be confused with a service. It is noteworthy that, if it were not for the legal custom of calling the lease of an intangible thing such as licensing or assignment, the contract in question could be called a lease contract, since it stipulates the delivery of the thing for a specified period of time, following exactly the concept of leasing movable property, provided for in article 565 of the Civil Code. Furthermore, corroborating the above, the Civil Code, in its article 83, III recognizes that personal rights of a patrimonial nature are considered movable assets.

In this sense, the provisions of Binding Precedent No. 31 of the Federal Supreme Court must be observed by analogy, which highlights: “The incidence of Tax on Services of Any Nature – ISS on movable property leasing operations is unconstitutional” Having established these premises regarding image rights, it is necessary to clarify the Tax on Services of Any Nature – ISSQN, to demonstrate that there is no correlation between its triggering event – ​​provision of services – and the activities of assigning the right to exploit images and other attributes of the athletes' personality. The Federal Constitution establishes the powers for the institution of taxes by the Union, States, Federal District and Municipalities. In its article 156, it states that it is up to the Municipalities to impose tax on services of any nature, not included in article 155, II, defined in complementary law. Complementary Law No. 116/03, in its art. 1st provides that the Tax on Services of Any Nature, which is the responsibility of the Municipalities and the Federal District, has as its triggering event the provision of services included in the attached list. Therefore, it is clear that only the amounts arising from the provision of services set out in the list attached to Complementary Law No. 116/03 can be taxed by ISSQN. In other words, the material element of said tax obligation is always a service. Private Law considers the provision of services as an obligation to do, and cannot be ignored by the complementary legislator, to the point of allowing the modification of the legal nature of the institute, especially because article 110 of the CTN does not allow it: “The tax law does not may change the definition, content and scope of institutes, concepts and forms of private law, used, expressly or implicitly, by the Federal Constitution, the State Constitutions, or the Organic Laws of the Federal District or Municipalities, to define or limit tax powers.”

Therefore, the transfer of the right to commercially exploit the image and other attributes of athletes cannot be considered as resulting from the provision of services, as it is clearly equivalent to an obligation to give/give, and should not be subject to tax taxation. in question, ISSQN taxation on image rights and other personality attributes clashes with the constitutional matrix of this tax itself, as provided for in article 156, III of the Federal Constitution. As the activity of assignment, succession or onerous licensing of exploitation of image rights and other attributes of the personality of professional football athletes does not constitute a provision of services, ISSQN taxation cannot occur on these contracts, with the right to repetition of the amounts paid unduly. In its article 165, I, the National Tax Code provides for the taxpayer's right to recover the undue payment, making it completely plausible that the tax charged in error will be returned to the assets of the person who paid.

 Source: Dra. Isabela Casagrande