By Gustavo Paulucci Teixeira
In a recent position, the 3rd Chamber of the 1st Ordinary Panel of the Administrative Council of Tax Appeals (“CARF”), recognized São Paulo Futebol Clube's exemption from IRPJ, CSLL, PIS and COFINS as it understood that the requirements for the configuration of a non-profit company were met.
According to the aforementioned ruling, the activities of a football club, such as ticket sales, brand licensing, product sales, negotiation of sponsorship contracts, sale of stadium plaques, sale of broadcast rights to games by radio and television stations, among others, would not constitute profit but rather surpluses.
This is because, according to the aforementioned Ruling, the football club in question “does not make a profit, but rather a surplus. According to item 10.19.1.3 of NBC T – 10.19 – non-profit entities, 'Non-profit entities are those in which the positive result is not allocated to the equity holders and the profit or loss are called, respectively, surplus or deficit”.
Thus, the revenues from the execution of various contracts would be used for the institutional purpose, and not for members or associates of the club, which is why the nature of the non-profit entity would not be distorted.
Therefore, the fact that the football club carries out economic activities would not allow us to conclude that it necessarily has a profit-making purpose; on the contrary, this activity would be part of its scope of obtaining resources to promote its business activities.
Furthermore, the winning vote referred to the opinions prepared by the Attorney General's Office (AGU), the Attorney General's Office of the National Treasury (PGFN) and the COSIT Consultation Solution No. 231/2018 that are favorable to the taxpayer, which “eliminates any litigiousness of the issue”.
The topic under debate, although not settled in administrative jurisprudence, finds support in other recent decisions handed down in favor of football clubs.
The Mazzucco & Mello Advogados tax team is available to provide any clarification on this topic.