Individual vs. Company (PF vs. PJ) Under the Tax Reform: What Changes for Those Who Bill Under Both Regimes
Individual (PF) vs. company (PJ) under Brazil's Tax Reform (LC 214/2025). When each structure makes the most sense after the reform.
Executive summary: Many independent professionals and consultants ask themselves: is it better to bill as an individual (PF) or as a company (PJ)? With the Tax Reform (LC 214/2025), this choice takes on new dimensions. Compare the two structures side by side and understand when each one makes the most sense after the reform.
Individual (PF) or Company (PJ)? The Central Question
Anyone working as an independent professional — accountant, lawyer, architect, designer, developer — often has two options for issuing invoices:
- As a PF (individual): issues service invoices as a self-employed worker, paying social security (INSS) through a dedicated slip (GPS) and income tax on the progressive scale.
- As a PJ (company): opens a company (usually an EIRELI or MEI, individual micro-entrepreneur) and issues invoices as a business, paying CSLL, corporate income tax (IRPJ, if under Lucro Presumido, the presumed-profit regime) and contributions through the appropriate regime.
Each structure has pros and cons in terms of tax burden, ancillary obligations, labor rights and retirement planning. The reform adds new variables to this equation.
How the Reform Affects the Individual (PF)
For independent professionals who bill as a PF, the main changes are:
- INSS via GPS: the self-employed professional continues to pay social security through the GPS slip. The reform does not directly change this mechanism, although other rules may revise rates and ceilings over time.
- Progressive IRPF: personal income tax continues to be charged on the progressive PF scale, with expense deductions.
- ISS for the self-employed: the current ISS logic tends to be replaced by IBS throughout the transition, which may alter the composition of the burden on services.
Practical example: Juliana is an architect and works as a self-employed individual (PF), issuing R$ 25,000 per month in service invoices. She pays INSS under the rule applicable to the individual contributor and IRPF according to the progressive scale. With the reform, she will need to monitor how IBS affects the taxation of her services before deciding on a structural change.
How the Reform Affects the Company (PJ)
For those who bill through a PJ (company), the changes are more complex:
- CBS replacing PIS/Cofins: the PJ company starts dealing with new rules for calculating and crediting tax on revenue.
- IBS replacing ICMS/ISS: especially relevant for service providers, this change alters the indirect burden on operations.
- Tax credits: under the new system, the PJ may have access to CBS and IBS credits on eligible inputs and expenses, something a PF normally does not benefit from in the same way.
Practical example: A PJ architecture firm bills R$ 40,000 per month. As a company under Lucro Presumido (presumed-profit regime), it currently pays PIS/Cofins, ISS, CSLL and IRPJ. With the reform, the structure now requires a fresh reading of CBS and IBS, and a company with significant costs in software, inputs and outsourcing may have an advantage if crediting is well leveraged.
Comparison: PF vs. PJ Under the Reform
Which to Choose? A Consultant’s Example
Scenario: Ricardo is a digital marketing consultant who bills R$ 35,000 per month. He has the option of operating as a PF (self-employed) or a PJ (company under Lucro Presumido, the presumed-profit regime).
PF analysis: He would pay INSS on the minimum wage (approximately R$ 1,500/month) + IRPF at a 27.5% rate on the amount after allowed deductions. The effective burden may reach approximately R$ 8,000–10,000 per month.
PJ analysis: Under Lucro Presumido, he would pay CSLL and IRPJ on the presumed margin, plus the new combination of CBS and IBS on revenue. The total burden may be lower than the PF’s in some scenarios, but this depends on the volume of expenses, the activity and the final crediting rules.
For Ricardo, the decision depends on factors such as the need for a formal employment (CLT) relationship, the intention to hire employees, revenue projections and access to tax credits. The recommendation is to run a detailed projection with professional help before the transition.
Want to understand the differences between PF and PJ under the Tax Reform and which structure makes the most sense for your activity? On /en/napratica, VMAHUB publishes practical guides for companies. For a personalized analysis of your case, talk to our team: [email protected]
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