Recibo is widely used as an alternative to Nota Fiscal in transactions involving sales or services in Brazil. This article will give a short outline about the different implications of Recibo and Nota Fiscal and the validity of these papers to the Brazilian Tax System.
Nota Fiscal and Recibo
Nota fiscal (commonly translated to English as invoice or receipt) is an official document that proves the existence of a commercial act (buying and selling of goods or provision of services). This document is issued to meet the requirements of the Brazilian taxes' collection, the transit of goods and transactions between buyers and suppliers.
As for the recibo, (which can be translated as bill of sale) it is a piece of writing issued by a company to prove the payment of a service or a purchase. But even though it has some legal validity, a recibo is not an official document.
As you can see, the basic difference between these two papers is that with the nota fiscal the government will collect taxes from the services rendered and goods purchased, and with the recibo it will not happen.
That is why the recibo has a temporary applicability. Legally, the issuer must convert the recibo into a nota fiscal afterwords, what can be done online (NF-e) or in a proper paper issued by an specific printer. Meaning: the issuance of notas fiscais are mandatory whenever there is a taxable event, which, in this case, is the sales of goods or provision of services.
The only people allowed to give recibos are some professionals providing services, such as dentists, doctors, lawyers, psychologists, teachers etc.
These professionals must be registered at the Municipal Secretariat of Finance, paying their taxes annually and have their transactions registered (gains and expenses) in a Cash Book. But it only applies to professionals that are not structured in a legal entity. Once those professionals constitute themselves as companies they are required to issue notas fiscais for their services.
As for other economic activities, all of them must issue notas fiscais, even the companies that are exempt or immune from taxation. Legal entities are not allowed to give recibos, instead of notas fiscais.
A nota fiscal is only valid if issued by an automatic proper printer, named ECF. These printers are registered at the State Finance Secretariat and are connected to a computer program that keeps for good all the data related to the money transactions of the company. This machine comes locked from the manufacturer and it can only be altered in the place where it was purchased.
It is mandatory for all the companies engaged in sales activity and retail goods or in provision of services to use the ECF equipment. Notas fiscais issued by this machine have all the characteristics required by law. If for some reason the ECF stops working - due to a power failure, a sudden malfunction or robbery, for example -, the company can fill up a nota fiscal paper by hand. But, legally, the hand-written nota fiscal can only be used when there is an emergency situation preventing the ECF use.
There is also another type of nota fiscal, the NF-e. Stored electronically, the NF-e has the same value as the printed nota fiscal, and came as another government's initiative to prevent tax evasion.
Among other benefits, the electronic nota fiscal reduces the printing costs, encourages e-commerce practices and the usage of new technologies and reduce the storage costs, once the documents would be stored in digital files.
As for the recibo, as stated above, it can only be used by some professionals providing services. This means that no one can sell goods and give recibos instead of notas fiscais. That is because recibos are very easy to falsify, especially when it comes to over invoicing.
Notas fiscais and recibos: how does it work on practice?
Everything you have read until this point is how everything should work legally. We know that tax evasion is one of the main problems the governments have to deal with. This is due to the increasing number of governmental initiatives aiming to avoid crimes against the tax system. But even with the governs' efforts, there are a lot of companies and individual people selling things and services in Brazil without issuing notas fiscais.
Establishments that completely ignore the obligation of issuing not fiscal are numerous. Small businesses, especially, are normally the ones who give handwritten bills as proof of payment, instead of notas fiscais. Every paper giving as proof of payment that did not come out from an original ECF machine is suspicious, especially the hand written ones.
That is because they can very be easily altered, as it pleases to the seller. As they have no value for taxes' purposes, recibos are not declared to the revenue. When the business owner has to report his earnings and losses, he will simply come up with some values. People know it is hard to get busted by the Revenue.
Although the taxes' supervision are getting more and more sophisticated in Brazil, the country is a real mess when it comes to notas fiscais. But not everyone that do not give a nota fiscal are intending to commit a crime, some of the establishments can be misinformed, or do not possess an ECF machine etc. Actually, the clients should ask for notas fiscais more often as this is part of their responsibility as well.
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