Coexistence Period: How to Operate Under the Old and the New System at the Same Time
How to operate during the transition period where the old taxes and the new IBS/CBS system coexist. Practical examples for accountants.
Executive Summary
LC 214/2025 establishes a Coexistence Period in which companies will have to deal simultaneously with the old taxes (PIS, Cofins, ICMS, IPI, ISS) and the new ones (CBS, IBS). For the accountant, this represents an unprecedented challenge of dual bookkeeping — and also an opportunity to advise clients more strategically. Vivian Sampaio explains how this coexistence works and what the professional needs to master.
What the Coexistence Period Is
Why coexistence exists
Coexistence is not a design flaw in the reform — it is a practical necessity. Because replacing all the old taxes cannot happen overnight, lawmakers created time windows in which some operations remain under the old regime while others already follow the new system.
Official duration
The officially scheduled coexistence period runs from 2026 to 2033, with varying intensity:
- 2026-2027: Coexistence limited to the CBS/IBS pilot — most operations still under the old regime.
- 2028-2030: Coexistence broadens as the phase-out of PIS/Cofins begins.
- 2031-2033: Residual coexistence until the old taxes are fully extinguished.
How It Works in Practice
Dual bookkeeping: the new normal
The accountant who serves companies in transition needs to master dual bookkeeping — that is, keeping two sets of tax entries running at the same time.
Practical example: A trading company selling goods in the state of São Paulo in 2027 needs to:
- Record CBS and IBS on its own sales operations (new system).
- Record ICMS on interstate operations (old system, still active).
- Record PIS and Cofins for operations not covered by the pilot (old system).
All of this at the same time, and for the same transaction in some cases.
Tax documents in two languages
Electronic invoices issued from 2026 onward began to include specific fields for CBS and IBS. But documents for operations that have not yet migrated still carry the old structure (PIS, Cofins, ICMS).
The accountant needs to know how to read and interpret both formats — and ensure the client does not lose credits due to bookkeeping errors.
Specific Rules of Coexistence
Internal vs. interstate operations
The exact migration schedule varies according to the operation, the supplementary regulations, and the acts that will govern the transition at each stage.
Credits during the transition period
One of the most complex issues of the coexistence period is the treatment of credits. There are three main scenarios:
- Credits from old taxes that have not yet been used when the tax is extinguished — what to do?
- CBS/IBS credits generated during the pilot that have not yet been used — are they transferable?
- Mixed credits — when a single operation generates credits in both systems.
Practical example: A furniture factory that buys raw material from a supplier opting into Simples Nacional (simplified tax regime) in 2027 may face scenarios in which the purchase produces different effects under each regime, requiring documentary and tax reconciliation before the credits can be used.
How to Advise Clients Through the Transition
Step 1: Map the client’s operating profile
Not every client will have the same coexistence experience. A company that operates only within a single state will face less complexity than one with interstate operations.
- Classify operations by type (internal, interstate, export, services).
- Identify which operations are already in the pilot and which are still in the old system.
- Calculate the weight of each type in total revenue.
Step 2: Review internal processes
The accountant should help the client establish internal procedures that ensure no operation slips out of correct bookkeeping.
- Create a checklist to identify the applicable regime per transaction.
- Define a validation flow for inbound tax documents.
- Set a cadence for reconciliation between the two systems.
Step 3: Model the financial impact
During the coexistence period, the effective tax burden may vary while the systems adjust. The accountant needs to:
- Simulate scenarios with varying test rates.
- Calculate the impact on the final price of products and services.
- Project the effects on cash flow.
Real Case: A Technology Company in Transition
Context
A software company (Lucro Real, actual-profit regime, annual revenue of R$ 12 million) has the following operations:
- Sales of software licenses to clients in several states (interstate operations).
- Provision of implementation and support services (technology services).
- Purchase of inputs from suppliers opting into Simples Nacional (simplified tax regime).
The challenge
From 2028, this company needs to:
- Record CBS and IBS on license sales (new system).
- Record ICMS on interstate operations (old system in transition).
- Record ISS on implementation services (old system coexisting with CBS/IBS).
- Record PIS and Cofins for operations not covered by the pilot (old system).
- Ensure that input purchases generate credits that can be used in both systems.
The solution
The accountant implements:
- An ERP parameterized with specific modules for each tax.
- A chart of accounts with separate cost centers for each regime.
- Monthly reconciliation reports between systems.
- Quarterly financial-impact projections.
Pitfalls to Avoid
1. Do not mix entries
The temptation to “simplify” by merging entries from the two systems creates problems with the Federal Revenue Service and the loss of credits.
2. Do not neglect old ancillary obligations
While the new system is in its implementation phase, the obligations of the old system remain in force — and so do the penalties for non-compliance.
3. Do not leave credits without documentation
CBS and IBS credits without documentary support are not recognized by the Federal Revenue Service. Each credit needs proof of origin.
4. Do not assume coexistence ends in 2033
For some operations, coexistence may extend beyond 2033 depending on disputes and administrative or judicial appeals still in progress.
Next Steps
The coexistence period represents a significant operational challenge for accountants and financial managers. Early preparation is the best strategy — those who wait until the last minute to adapt end up making mistakes that come at a high cost.
Want to understand how to advise your clients during the tax transition period? In its Na Prática section, VMAHUB publishes practical guides for accountants. For a tailored analysis of your client’s situation, talk to our team: [email protected]
Read also:
- Tax Reform Timeline 2026-2033
- Ancillary Obligations Under the Tax Reform
- Accounting Firm: How to Prepare
Sources: LC 214/2025; Federal Revenue Service — Manual on the Coexistence of Tax Systems; CBS/IBS pilot manual.
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