What the sector pays
Franchisors declared R$ 603.4 million in royalties in Rio
Franchise royalties and fees declared in Nota Carioca in 2025
See the full table (15 rows)
| Year | Declared revenue | ISS collected | Effective rate |
|---|---|---|---|
| 2011 | R$ 122.8 million | R$ 4.3 million | 3.51% |
| 2012 | R$ 160.5 million | R$ 5.5 million | 3.43% |
| 2013 | R$ 201.2 million | R$ 6.5 million | 3.22% |
| 2014 | R$ 234.6 million | R$ 7.9 million | 3.39% |
| 2015 | R$ 261.7 million | R$ 9.2 million | 3.51% |
| 2016 | R$ 377.6 million | R$ 14.1 million | 3.74% |
| 2017 | R$ 367.4 million | R$ 11.3 million | 3.06% |
| 2018 | R$ 371.2 million | R$ 7.4 million | 1.99% |
| 2019 | R$ 392.4 million | R$ 8.5 million | 2.17% |
| 2020 | R$ 362.4 million | R$ 6.7 million | 1.84% |
| 2021 | R$ 360.5 million | R$ 9.2 million | 2.56% |
| 2022 | R$ 390.5 million | R$ 14.4 million | 3.68% |
| 2023 | R$ 531.6 million | R$ 12.8 million | 2.41% |
| 2024 | R$ 559.0 million | R$ 12.7 million | 2.27% |
| 2025 | R$ 603.4 million | R$ 12.5 million | 2.07% |
The franchise contract is a service taxable by ISS (municipal service tax), and franchisors declare royalties and fees to the municipality where they are based. Almost no city government discloses this data. Among state capitals, Rio de Janeiro publishes the franchise code month by month in Nota Carioca, the city's electronic service invoice system, and Belo Horizonte publishes the ISS calculation base of invoices under the franchise code, the subject of a separate indicator.
In 2025, franchisors based in the city declared R$ 603.4 million under this code, a value 54% higher than in 2019 in current reais. On this base, R$ 12.5 million in ISS was collected, a ratio of 2.07%, close to the statutory rate for the service, 2% since December 16, 2022. On that date Law 7.706/2022 took effect, which included franchising among the specific rates of the Municipal Tax Code (Law 691/1984, Article 33, II, item 26). Until then, the general rate of 5% applied.
The reduction is conditional. The sector's tax base must grow 10% every five years over the period from September 2021 to August 2022, adjusted by the IPCA-E consumer price index, and the rate returns to 5% if the condition is not met. The declared base went from R$ 390.5 million in 2022 to R$ 531.6 million in 2023, the first full year under the new rate, and the data do not allow this increase to be attributed to the law. From 2011 to 2022, under the general rate, the ratio of tax to base ranged between 1.84% and 3.74%. The gap may reflect Simples Nacional (simplified tax regime for small companies), under which the company pays ISS through a single payment slip, withholdings in another municipality and the interval between declaration and payment. The data do not separate these causes and do not indicate underpayment by any company.
How we calculate
The figures come from the proactive disclosure of the Municipal Finance Department (Secretaria Municipal de Fazenda) of Rio de Janeiro, which publishes the declared value and the tax collected by service code in Nota Carioca. We isolated code 170801, described in the spreadsheets as franchising, which corresponds to subitem 17.08 of Complementary Law 116/2003 and to subitem 17.07 of the list in Article 8º of Law 691/1984. We added up the twelve months of 2025 and compared them with the same sum for 2019, without deflating, so the 54% change is nominal. The effective rate is the ratio between the ISS collected and the value declared in the same year. The scope is municipal and covers only service providers based in the city of Rio de Janeiro, which issue the local electronic invoice. The statutory rate was read in the text of the municipal tax legislation updated to February 28, 2026, published on the website of the City Council (Câmara Municipal), and consulted on October 30, 2026.
What this figure does not show
- The data cover only service providers based in the city of Rio de Janeiro and cannot be extrapolated to the country, since most franchisors are headquartered in another municipality.
- The 54% change between 2019 and 2025 is nominal, because the city government publishes current values and we do not apply a deflator.
- The effective rate of 2.07% is a ratio between tax collected and declared base and does not indicate underpayment by any company. It may reflect Simples Nacional, withholdings made in another municipality and the lag between declaration and payment, without the data allowing these causes to be separated.
- The 2% rate applies to franchise services defined in an act of the executive branch (Decree 51.822/2022), which was not read. The rates page of the Finance Department, read on October 30, 2026, lists Article 33 only up to item 25 and refers the other services to 5%, and here the updated text of the law prevails.
- Subitem 17.08 receives whatever each company classifies there, which may include fees that are not royalties and leave out amounts recorded under other subitems.
- The series spans the Federal Supreme Court (STF) decision of 2020 and the rate change of December 2022, and the data do not separate the effect of each one from the increase in revenue.
Frequently asked questions
Do franchises pay ISS on royalties in Brazil?
Yes. Franchising is in subitem 17.08 of the list of Complementary Law 116/2003, and the Federal Supreme Court (STF) established, in general repercussion Theme 300, with a final and unappealable decision on September 30, 2022, that this levy of ISS (municipal service tax) is constitutional, a thesis transcribed in a headnote of the STJ (Superior Court of Justice) recorded in the indicator on franchising at the STJ.
How much do franchisors declare in royalties in Rio de Janeiro?
Franchisors declared R$ 603.4 million in 2025 under the franchise code of Nota Carioca, Rio's electronic service invoice system, a value 54% higher than in 2019, according to the Municipal Finance Department (Secretaria Municipal de Fazenda).
What is the ISS rate on franchising in Rio de Janeiro?
It has been 2% since December 16, 2022, under item 26 of Article 33, II, of Law 691/1984, included by Law 7.706/2022, and it returns to 5% if the sector's tax base does not grow 10% every five years. In 2025, the ratio between the ISS (municipal service tax) collected and the declared base was 2.07%.
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