ICMS on the taxable basis of PIS and COFINS – Federal Supreme Court decided on the modulation of effects and the formula criteria

In March 2017, the Federal Supreme Court (“STF”) decided on the Extraordinary Appeal (“RE”) No. 574,706 that the Tax on the Circulation of Goods and Services (“ICMS”) must not be included in the taxable calculation basis of the Social Contributions – Social Integration Program (“PIS”) and Contribution for the Financing the Social Security (“COFINS”). Following the judgement, the Attorney-General of the National Treasury filed a motion for clarification (“EDs”) against the decision to question and request STF to clarify: (i) what would be the criteria for calculating the amounts to be excluded (amount highlighted on the invoices or actually paid), and (ii) from which date the decision would be valid (modulation/limitation).

 

Today (May 13,2021), within the judgment of the EDs in the RE No. 574.706/PR, STF’s judges decided the following:

 

STF Judge

Formula criteria¹

Modulation
(time restrain on the legal effects of the decision)

Min. Cármen Lúcia

highlighted on the invoices

As of Mar 15,2017 (except for the lawsuits filed previously)²

Min. Kássio Nunes Marques

actually paid

As of Mar 15,2017 (except for the lawsuits filed previously)²

Min. Alexandre de Moraes

highlighted on the invoices

As of Mar 15,2017 (except for the lawsuits filed previously)²

Min. Edson Fachin

highlighted on the invoices

No

Min. Luís Roberto Barroso

actually paid

As of Mar 15,2017 (except for the lawsuits filed previously)²

Min. Rosa Weber

highlighted on the invoices

No

Min. Dias Toffoli

highlighted on the invoices

As of Mar 15,2017 (except for the lawsuits filed previously)²

Min. Ricardo Lewandowski

highlighted on the invoices

As of Mar 15,2017 (except for the lawsuits filed previously)²

Min. Gilmar Mendes

actually paid

As of Mar 15,2017 (except for the lawsuits filed previously)²

Min. Marco Aurélio

highlighted on the invoices

No

Min. Luiz Fux

highlighted on the invoices

As of Mar 15,2017 (except for the lawsuits filed previously)²

   

¹ Taxpayer request: amount highlighted on the invoices
Federal Revenue of Brazil (“RFB”) understanding: amount actually paid

² Taxpayers who filed lawsuits after the judgment of RE 574,706/PR on Mar 15, 2017 won’t be able to reimburse amounts paid prior to that date

 

In summary (8 votes in favor and 3 not in favor):

 

  1. The amount of ICMS excluded from the PIS and COFINS taxable basis is one highlighted on the invoices;

 

  1. Only taxpayers who filed lawsuits up to the date of the judgment of RE No. 574,706 on March 15, 2017 will be able to benefit from the STF’s decision and recover amounts unduly paid before that date.

 

  1. Taxpayers who filed a lawsuit claiming the reimbursement of the last 5 years, will be allowed to refund only amounts unduly paid as of March 15, 2017.

 

Therefore, for those that do not file a law suit until the present date, we recommend to do it in order to request the reimbursement of amounts unduly paid (full amount or difference between the amount highlighted and actually paid) as of March 15, 2017 updated by the SELIC interest rate.

 

We remain at your disposal for clarifications.

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