The Brazilian Supreme Federal Court, on April 3, upheld the breaking of res judicata in tax matters. This is because six out of the eleven Justices voted against the declarations of objections from companies that aimed at modulating the effects of the Supreme Court’s decisions. It is important to mention that in 2023, the Court’s understanding was for the due payment of tax on Profit Contribution since 2007.
The issue was brought to the physical plenary session after a request for emphasis by Justice Luiz Fux, and the analyses began in November 2023. However, the case was suspended due to a request for further examination by Justice Dias Toffoli.
The matter was the subject of two extraordinary appeals with recognized general repercussion: RE 955227 (Theme 885) and RE 949297 (Theme 881), presented by the Federal Government against decisions that, in the 1990s, deemed the law that instituted the Social Contribution on Net Profit (CSLL) to be unconstitutional and gave two companies the right not to collect it.
The Supreme Federal Court, in February 2023, decided that a definitive decision, made final and unappealable, on continuously collected taxes, loses its effects if the Court later pronounces itself in the opposite direction.
Thus, in such case, it was established that the involved companies must carry out the retroactive collection of the Social Contribution on Net Profit (CSLL) as of 2007, when the validity of the law that instituted said tax was recognized.
The Justices rejected the possibility of modulating the effects of the decision, which would imply that the companies would only have to collect such tax from 2023, the date on which the new understanding was rendered.
On the other hand, the companies filed six declarations of objections, aiming at the modulation of effects so that the amounts would be due from 2023, when the thesis on the loss of the effectiveness of the decisions that authorized them to interrupt the collection was established.
Once the voting started, Rapporteur Justice Luís Roberto Barroso upheld the same understanding of the virtual plenary, that the objections, opposed by amici curiae, should not be recognized.
Justices Cristiano Zanin, Alexandre de Moraes, Gilmar Mendes, and Justice Cármen Lúcia aligned with the rapporteur’s vote.
Opening the diverging opinion, Justice Luiz Fux argued that the effects should start from the publication of the minutes of the judgment, in February 2023, when the Supreme Federal Court allowed for the annulment of decisions that had been made final in case of a change in the Court’s understanding. He added that the STF has the power and the institutional duty of being the guardian of legal security, especially in taxation matters.
Following the Rapporteur’s vote, Justice André Mendonça decided for the non-enforceability of the tax fines issued, both punitive and moratory, by the Administration. While Justice Edson Fachin followed Justice Luiz Fux, emphasizing that, if Fux’s position were to be defeated, he would follow Justice André Mendonça’s understanding.
The Supreme Court will still discuss the possibility of waiving fines during the period when the tax was not paid and will also establish a thesis on the subject. There had already been a majority formed to reject the appeals since November of the previous year, but Justice Dias Toffoli requested an examination of the court records – more time for analysis – and halted the voting.
The matter decided by the Court has general repercussion, meaning that the thesis established by the Court must be applied by other instances to proceedings discussing similar matters. Although the concrete cases discuss the CSLL, the solution should be applied to actions discussing any taxes.