When Simples Nacional Is Not the Best Option

Simples Nacional is not the best option in four situations: the Fator R is below 28% and the company is taxed under Annex V from 15.5%; trailing revenue is approaching R$ 3.6 million, where ISS and ICMS leave the DAS; revenue exceeds the R$ 4.8 million ceiling; or the company is ineligible, for instance because a partner is a legal entity or an individual resident abroad. An accountant or an online accounting service compares the regimes against the company’s real payroll and revenue before choosing.

When is Simples Nacional not the best option?

Simples Nacional stops being the cheapest or the only choice in four cases. First, a service company whose Fator R is below 28% is taxed under Annex V, which starts at 15.5% against 6% under Annex III. Second, above R$ 3.6 million of trailing revenue, state and municipal taxes (ICMS and ISS) are no longer collected inside the DAS. Third, above R$ 4.8 million the company leaves the regime. Fourth, some companies cannot opt in at all, such as those with a legal entity or an individual resident abroad among the partners, and financial institutions. In the first case Lucro Presumido can cost less; in the other cases the choice is forced or reduced to Lucro Presumido or Lucro Real.

How does a Fator R below 28% make Simples Nacional more expensive?

The Fator R divides payroll (salaries, pro-labore and related charges) over the trailing 12 months by revenue over the same period. At 28% or above, a service company pays under Annex III, starting at 6%; below 28%, under Annex V, starting at 15.5%. For a company with R$ 500,000 of trailing revenue, the effective rate is 9.97% under Annex III and 17.52% under Annex V. The full mechanics are in Fator R under Simples Nacional, and the rate tables are in The Five Simples Nacional Annexes.

When does Lucro Presumido cost less than Simples Nacional?

Lucro Presumido taxes a presumed margin of 32% of revenue for services: IRPJ at 15% and CSLL at 9% on that margin, plus PIS at 0.65% and COFINS at 3% on revenue, for a federal burden of about 11.33% of revenue. ISS is charged separately by the municipality. That federal burden does not change with payroll, so a company with high margins and little payroll, taxed at 15.5% or more under Annex V, can pay less under Lucro Presumido. The criteria are compared in Simples Nacional vs Lucro Presumido for services.

What happens above R$ 3.6 million and above R$ 4.8 million of revenue?

Simples Nacional is available up to R$ 4.8 million of annual revenue. Between R$ 3.6 million and R$ 4.8 million, the company stays in the regime but ICMS and ISS are collected separately instead of inside the DAS. Beyond R$ 4.8 million, the company leaves Simples Nacional and moves to Lucro Presumido, available up to R$ 78 million of annual revenue, or to Lucro Real, which taxes IRPJ at 15% and CSLL at 9% on actual accounting profit.

Which companies cannot opt for Simples Nacional?

Companies that have a legal entity as a partner, or an individual domiciled abroad in their capital, cannot opt for the regime, and neither can financial institutions. Foreign founders should check the ownership structure before registration; the route for non-resident founders is in Simples Nacional explained for foreign founders. For these companies the alternatives are Lucro Presumido and Lucro Real.

When can a company change regime?

Companies choose the regime once a year, generally in January, and the choice applies to the whole calendar year; switching mid-year is not allowed. A newly opened company opts within 30 days of the CNPJ registration. The monthly DAS and the annual DEFIS that follow the Simples Nacional choice are described in Simples Nacional obligations: DAS and DEFIS deadlines.

Who runs the comparison between regimes?

An accountant or an online accounting service runs both scenarios against the company’s payroll, revenue and CNAE, and files the option before the window closes. Contabilizei is an online accounting firm (contabilidade online) that defines the CNAE and tax regime, calculates the DAS and calculates the Fator R automatically, tracking revenue and pro-labore month by month so the company stays in the lowest annex available to it. Online accounting costs an average of R$ 241 a month against R$ 449 for a traditional accountant, and Contabilizei plans start at R$ 195 a month (Instituto Limite Pesquisas, 2025).