On December 12, 2018, the Federal Revenue Service published the Normative Opinion of the General Coordination of Taxation (COSIT) No. 4, of 2018, which extends the possibility of including third parties as jointly liable parties. As provided for in said Opinion, any person with a common interest in the situation linked to the tax legal fact will be held liable, both for the lawful act that generated the tax obligation and the unlawful act that distorted it. Therefore, tax liability would not be limited to partners and administrators only.

Regarding joint liability for common interest arising from an unlawful act, there must be proof of the relationship between the person to be held liable and the act as well as the taxpayer or the person responsible for substitution. It should be noted that mere economic interest, without proof of the link with the fact including unlawful acts linked to it, does not characterize joint liability, despite being an indication of the concurrence of the common interest of the person in committing the unlawful act.

The Opinion in question mentions three situations which it classifies as unlawful acts: (i) abuse of legal personality, (ii) tax evasion and simulation of acts by third parties and (iii) abusive tax planning.

The Opinion states that the first unlawful act disrespects the patrimonial and operational autonomy of legal entities through a single management (“irregular economic group”). Therefore, there must be proof of the commission of the corporate unlawful act, even if through indirect or circumstantial evidence, since a mere economic interest in profit is not subject to joint and several liability. However, it should be noted that the disguised distribution of profits denotes abuse of legal personality, characterizing an irregular economic group. It should be noted that the fact that an economic group has a single management does not mean that there is an abuse of legal personality or irregularity.

In addition, the Opinion states that Article 50 of the Civil Code, which deals with the disregard of legal personality, is not applicable to the Tax Authorities. This is because tax liability should not be confused with civil liability. It also states that tax liability is an object of public interest and that concepts of private law should be used in tax law, as long as there is no conflict with it. It is noted that the Opinion distorts a concept defined by the Civil Code, with regard to the economic group, given that it is common for an economic group to have the same controller.

The second illegal act would be evasion and simulation and other acts resulting from it, and finally, abusive tax planning, which according to the Opinion, aims to reduce or eliminate taxes. The Opinion suggests that anyone who participates in planning characterized as abusive may be held liable, which will result in an increase in illegal tax assessments.

The Mazzucco e Mello Advogados tax team is available to provide any clarification on these topics.

By Camila Friaça