Modulation will not apply to actions filed up to the trial start date, 09/17/2021.
On April 29, the Brazilian Supreme Court (STF) unanimously decided to modulate the effects of the decision handed down in Extraordinary Appeal 1,063,187/SC (Theme 962). The judgment ruled out the incidence of Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL) on the adjustment of amounts by the Selic rate received by the taxpayer in undue payment. According to the judgment minutes, the decision only applies to default interest on administrative or judicial undue payment adjustments by the Selic rate, taking effect as of September 30, 2021, except for lawsuits filed up to September 17 of the same year and taxable events prior to September 30 in which IRPJ and CSLL were not collected on the Selic rate.
The request for modulation of the effects was filed by the Attorney General's Office of the National Treasury (PGFN) in February 2021, on the grounds that the Superior Court of Justice (STJ) had an understanding favorable to the tax authorities, incurring a change in case law and a multiplying effect on taxpayers who filed lawsuits after the rapporteur's vote was issued. Thus, the National Treasury requested that the STF not reserve the reservations for the lawsuits, and if it did, that it be done by September 1, 2021, the date on which the trial was included on the agenda. If this date was not accepted, the Treasury also proposed the date of September 17, 2021, which corresponds to the start of the trial.
When analyzing the requests of the National Treasury, the rapporteur Min. Dias Toffoli ruled that the judgment only applies to cases in which there is an increase in default interest through the Selic rate. Therefore, the decision does not apply to other indexes that are also used to calculate default interest. In addition, the rapporteur determined that the decision would take effect as of September 30, 2021, except for lawsuits filed up to the 17th of the same month. Therefore, taxpayers who filed lawsuits up to the date the judgment begins have their right to exclude default interest administered by the Selic rate from the calculation basis of IRPJ and CSLL for the five years prior to the filing of the lawsuit. If the lawsuit was filed after that date, the decision can only be applied to amounts paid as of September 30, 2021.
Analyzing recent decisions by the STF on tax matters, it is clear that the modulation of effects has been used frequently, indiscriminately and adopting time criteria that were previously uncommon in this type of situation, always with the aim of minimizing damage to the public coffers. That said, it has become increasingly important for taxpayers to anticipate relevant tax discussions, under penalty of seeing their rights curtailed by the institute of modulation of effects.
