On August 16, the 1st Panel of the Superior Court of Justice (STJ) decided that companies can deduct income tax (IRPJ) from all payments to administrators and board members, and not just fixed monthly amounts.

According to the STJ, the aforementioned measure will affect the Real Profit calculation regime, which includes companies with annual revenues above R$1,400,000.

The matter was analyzed by the 1st Panel through an appeal filed by Marcep S/A against a decision by the Regional Federal Court (TRF) of the 3rd Region that prevented deductions from the calculation of IRPJ. For the judges of the aforementioned Court, the measure would only be supported if it were made on fixed and monthly payments. They used Normative Instruction No. 93/97, of the Federal Revenue Service, as a basis. The aforementioned rule provides for the calculation of IRPJ and CSLL and prevents deductions from payments that do not correspond to fixed monthly remuneration.

However, the STJ has taken a different view of the case. According to the majority of the ministers of the First Chamber, all operating costs and expenses are deductible from Income Tax under the real profit regime. The understanding of the rapporteur, Minister Regina Helena Costa, prevailed, citing precedents in which the Court states that Income Tax cannot be charged based solely on an infra-legal rule, a situation that, according to her, occurs in the aforementioned case.

Furthermore, the minister stressed that all operating costs and expenses are deductible from the Income Tax calculation base in calculations under the real profit regime, a concept that includes payments to administrators and third parties, even if made occasionally. These are company expenses, not income.

In this way, the decision, although it does not have a binding effect, may give strength in first and second instance trials, where companies, until now, have not been successful.