In a session held last Wednesday, the 4th, the STF Plenary formed a majority to eliminate the collection of ICMS on transactions involving licensing or assignment of the right to use computer programs, in the joint judgment of ADIs 1945 and 5659.

So far, five Ministers have already expressed their support for the vote of Min. Dias Toffoli - Alexandre de Moraes, Luís Roberto Barroso, Rosa Weber, Ricardo Lewandowski and Marco Aurélio - who adopts the understanding that software is made available over the internet, without definitive transfer to the consumer and without change of ownership of the asset, which is why it should be taxed by ISS and not by ICMS.

In his vote, Justice Dias Toffoli stated that the mere fact that the service is defined in a supplementary law as taxable by the ISS would already attract the incidence of this tax only on the total value of the transaction – eliminating the incidence of the ICMS – and defended the thesis that the interpretation of the constitutional text cannot be oblivious to these new realities. According to Toffoli, the licensing or transfer of the right to use software, whether standardized or custom-made, falls under subitem 1.05 of the list of services attached to Federal Complementary Law 116/2003 as taxable by the ISS, regardless of whether the transfer of the right to use occurs via download or through cloud access.

Justice Gilmar Mendes partially disagreed with the understanding adopted by Justice Dias Toffoli and defended the incidence of ISS on software developed in a customized manner and ICMS on transactions involving standardized software sold on an industrial scale. Justices Edson Fachin and Cármen Lúcia voted in favor of the incidence of ICMS on such transactions, adopting the understanding that computer programs are goods, even if they are circulated digitally and virtually.

The president of the Court, Min. Luiz Fux, requested a review and the trial of the ADIs should be resumed next week, with the presence of Kassio Nunes Marques, who took office as the new Minister of the STF in a session held this Thursday, the 5th.

Finally, it is important to note that Justice Dias Toffoli suggested modulating the effects of the decision from the date of the session in which the judgment on the merits is concluded. Justices Alexandre de Moraes, Luís Roberto Barroso, Rosa Weber and Ricardo Lewandowski voted in the same way. Justice Marco Aurélio was against modulating the effects.

Regarding the modulation of the effects of the decision, it is worth noting that the institute has been used more frequently in tax matters in recent years – even though its requirements are questionable – which reinforces the importance of taxpayers anticipating tax discussions with relevant legal plausibility and economic relevance, in order to ensure their rights in the face of the frequent excesses practiced by tax authorities.

Our tax team is aware of the possible developments of this judgment and remains available to clarify any questions regarding the matter.