Taxation of Self-Employed Professionals: Carnê-Leão and Deductions

This page is a translation of the original Portuguese text, provided for convenience. It deals with Brazilian law. If there is any discrepancy, the Portuguese version prevails. Read the original in Portuguese

Self-employed professionals must pay the carnê-leão (monthly income tax prepayment) on income received from individuals and from abroad, at progressive rates of up to 27.5%, with the right to specific deductions.

What the Carnê-Leão Is and Who Must Pay It

The carnê-leão is the mandatory monthly payment of income tax owed by individuals who receive income from other individuals or from abroad without tax withheld at the source. The obligation is set out in Article 106 of the Income Tax Regulations (Decree 9.580/2018) and covers liberal professionals, self-employed workers, residential and commercial landlords, recipients of court-ordered child or spousal support, and any taxpayer who receives taxable income without an employment relationship.

The carnê-leão must be paid by professionals such as lawyers, physicians, dentists, engineers, architects, accountants, psychologists, physical therapists, private tutors, consultants, and other service providers who receive fees directly from individuals. When the service is provided to a company, the hiring company is responsible for withholding income tax (IR) at the source, so the carnê-leão does not apply to those amounts.

Payment is due by the last business day of the month following receipt, through a DARF (federal revenue payment slip) using code 0190. The rates are the same as those in the progressive IRPF (individual income tax) table: exemption for monthly income up to R$ 2.259,20, and rates of 7.5%, 15%, 22.5%, and 27.5% for the higher brackets (2026 figures). The calculation is done through the “Carnê-Leão Web” system, available on the e-CAC portal of the Receita Federal (Brazil’s federal tax authority).

Deductions Allowed in the Carnê-Leão

Self-employed professionals are entitled to deduct from their monthly gross income certain expenses necessary to earn that income. The livro-caixa (cash book) is the accounting record where these expenses are logged, and keeping it regularly is a condition for claiming the deductions. Deductible expenses include rent for the office or practice, condominium fees and IPTU (municipal property tax) on the professional premises, supplies, employee costs (wages, payroll charges, FGTS (Brazil’s severance fund), and employer INSS (Brazil’s National Social Security Institute) contributions), and travel costs required by the work.

Expenses for third-party services directly related to the professional activity are also deductible, such as secretarial services, cleaning, accounting, and upkeep of the workspace. Investments in professional development, such as continuing education courses, conferences, and seminars related to the work performed, may be recorded in the livro-caixa as long as they are properly documented with receipts and invoices.

Some expenses cannot be deducted in the livro-caixa, such as clothing (except mandatory uniforms), personal meals, fuel for personal use, and depreciation of a vehicle used for both personal and professional purposes without proportional documentation. The distinction between types of taxes also matters: the INSS contribution of a self-employed professional (an individual contributor) is deductible on the annual return, but not in the monthly carnê-leão calculation.

Payment is due by the last business day of the month following receipt, through a DARF using code 0190.

Carnê-Leão Web and Digital Bookkeeping

Since 2021, the Receita Federal has offered “Carnê-Leão Web,” an online system integrated with the e-CAC portal that replaced the earlier desktop program. In the system, self-employed professionals log each month the income they received from individuals and from abroad, the deductible expenses from the livro-caixa, and the payers’ information. The system automatically calculates the tax due and generates the DARF for payment.

The biggest advantage of Carnê-Leão Web is its automatic integration with the IRPF Annual Adjustment Return. When completing the annual return, taxpayers can import all the data recorded in the system throughout the year, avoiding typing errors and inconsistencies. Income, deductions, and taxes paid are carried over automatically to the corresponding sections of the return.

Professionals who do not keep a regular livro-caixa lose the right to deduct expenses and are taxed on the gross amount of their income. This penalty makes organized bookkeeping an essential investment for reducing a self-employed professional’s tax burden. Financial management software and expense-tracking apps can help with day-to-day recordkeeping and make it easier to transfer the information to Carnê-Leão Web each month.

INSS for Self-Employed Professionals: Mandatory Contribution

In addition to income tax, self-employed professionals must pay social security contributions to INSS as individual contributors. The rate is 20% of monthly earnings, up to the contribution salary ceiling (R$ 8.475,55 in 2026). Payment is made through a GPS (Social Security Payment Slip) using code 1007, by the 15th of the month following the reference month.

When a self-employed professional provides services to a company, the hiring company is required to withhold 11% of the amount paid as a social security contribution, under Article 216, §26, of the Social Security Regulations. In that case, the professional must subtract the amount withheld from the total contribution owed for the month, avoiding double payment. Tracking these withholdings correctly is essential to avoid paying more than you owe.

Self-employed professionals’ social security contributions secure access to benefits such as retirement, sickness benefits, maternity pay, and survivor’s pension. Professionals should keep track of the effective INSS rate and how the contribution is calculated to make sure payments are correct and that their contribution time is properly counted toward future retirement.

Frequently Asked Questions

What is the difference between the carnê-leão and the monthly DARF for self-employed professionals?

The carnê-leão is the obligation to calculate and pay income tax each month on income received from individuals or from abroad. The DARF (Documento de Arrecadação de Receitas Federais, or Federal Revenue Collection Document) is the payment slip used to make that payment, with code 0190. In other words, the carnê-leão is the tax obligation itself, while the DARF is the payment slip generated by the Receita Federal system to pay the tax assessed.

What happens if a self-employed professional does not pay the carnê-leão each month?

Failure to pay the carnê-leão on time results in a late-payment penalty of 0.33% per day of delay (capped at 20%) plus interest at the Selic rate, accrued from the month after the due date. In addition, on the annual return, the Receita Federal system detects the absence of monthly payments and may impose an assessment penalty of 50% on the amount not paid on time, if the taxpayer does not voluntarily correct the situation before any audit.

How should a self-employed professional who serves both individuals and companies report income?

Income received from companies is reported on the “Taxable Income Received from a Legal Entity” schedule, because the company has already withheld income tax at the source. Income from individuals is calculated monthly under the carnê-leão and reported on the “Taxable Income Received from an Individual and from Abroad” schedule. On the annual return, both types of income are added together to calculate the tax adjustment owed, with credit given for the tax withheld at the source and the carnê-leão already paid.

As informações deste artigo são de caráter informativo e não substituem consulta jurídica individualizada. Cada caso possui particularidades que exigem análise específica.