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Associates Blog

Judicial Decision Allows Tax Compensation for Industry Beyond 5-Year Limit

25 de dez de 2024

2 min read

By Suzane K. S. Pessoa, Tax Partner, and Priscilla Veras, Partner and Coordinator of Tax Litigation.



The time limit for utilizing credits resulting from a final judicial decision has been a recurring topic in legal discussions. This is because the Brazilian Federal Revenue Service (RFB) has argued that taxpayers have five years to fully compensate for tax credits recognized by the courts.


This understanding is explicitly outlined in Normative Opinion COSIT No. 11, dated December 19, 2014, and Consultation Solution COSIT No. 239/2019.


However, case law presents a different perspective, as no legal provision explicitly requires compensation to be completed within five years.


On July 5, 2024, a judge from the 2nd Federal Court of Jundiaí/SP issued a preliminary injunction allowing a cosmetics manufacturer to continue compensating until the exhaustion of the remaining balance, even beyond five years after the final judgment that established the credit.


Similarly, the Superior Court of Justice (STJ) and Federal Regional Courts (TRFs) have interpreted Article 168, caput, of the National Tax Code (CTN) differently from the RFB, asserting that the deadline stipulated in the article pertains to requesting compensation, not completing it.


Superior court precedents have consistently held that administrative registration of credits, when done within five years from the final judgment, interrupts the prescriptive period for credit utilization. Once compensation begins, there is no time limit for its completion.


Here are some key precedents:


Case No. 5042923-41.2023.4.04.7100 – 13th Federal Court of Porto Alegre – TRF4

Appeal by the Union in Case No. 5059351-35.2022.4.04.7100/RS – 1st Panel – TRF4

Appeal by the Union in Case No. 5002120-41.2020.4.03.6100 – 4th Panel – TRF3

Special Appeal No. 1.469.954 – PR (2014/0178676-4) – STJ

Legislative Changes: Law No. 14.873/2024


Law No. 14.873/2024, enacted on May 28, 2024, amended Law No. 9.430/1996 to impose limits on tax compensation for credits arising from final judicial decisions.


Key provisions include:


• A minimum limit of 1/60 of the total credit value (adjusted as of the date of the first compensation declaration).

• No limit applies to credits below R$10,000,000.00.

• The first compensation declaration must be submitted within five years from the final judgment or the approval of the withdrawal of the judicial enforcement action.


The new law does not specify a time limit for exhausting compensation credits. It is also unclear about its application to pending or active credit registration requests with the RFB and how compensations under R$10,000,000.00 will be operationalized.

Instruction Normative RFB No. 2,055/2021


Article 106 of this norm establishes that the five-year limit pertains solely to exercising the right to claim the credit.

Conclusion


The RFB’s interpretation of a five-year limitation for utilizing tax credits from final judicial decisions contradicts the jurisprudence and precedents of the Superior Court of Justice and Federal Regional Courts. These courts recognize taxpayers’ rights to initiate compensation within the five-year statutory period without imposing a completion deadline.


Our tax team is fully available to address any questions and provide assistance on this matter.