With a majority of 9 votes to 2, the Supreme Federal Court (STFThe Brazilian Supreme Court (TST) ruled this Tuesday (October 21st) that the ICMS differential tax rate (Difal) in interstate transactions destined for non-taxpayer end consumers must follow the ninety-day prior notice period. Therefore, taxpayers may be charged starting in April 2022. However, the decision will be modulated to protect taxpayers who did not pay the Difal in 2022 and filed lawsuits until November 2023.
The ministers analyzed Complementary Law 190/2022, which regulated the collection of ICMS Differential Tax. In this specific case, the company argues that the tax should only be collected in 2023, based on the argument of violating the principles of prior notice.
The trial began in August, but had been suspended at the request of Minister Luís Roberto Barroso, who returned the case for review last week, on the eve of his retirement. The vote was finalized this Tuesday (October 21).
On the merits, nine justices followed the vote of the rapporteur, Justice Alexandre de Moraes, who suggested the ninety-day prior notice period, understanding that the law "did not modify the taxable event, nor the tax base, but only the destination of the revenue, through a fiscal technique that attributed the active tax capacity to another political entity." The vote was fully supported by Justice Nunes Marques.
Justice Edson Fachin dissented, arguing for the application of the annual prior notice principle, understanding that this is a new tax. He was joined by Justice Cármen Lúcia.
While agreeing with Moraes on the merits, Minister Flávio Dino made a reservation and proposed the modulation of effects to protect taxpayers who did not collect the DIFAL (Differential Tax) in 2022 and filed lawsuits until November 2023 — the date of judgment of actions (ADIs 7066, 7070 and 7778) that also decided on the ninety-day prior notice period for the collection of ICMS (Tax on Circulation of Goods and Services) Differential in operations destined for the final consumer.
Ministers Luiz Fux, André Mendonça, Gilmar Mendes, Luís Roberto Barroso, Cristiano Zanin, and Dias Toffoli agreed with Dino's reservation and formed the majority in favor of modulation.
Tax lawyer Leonardo Aguirra de Andrade, partner at Andrade Maia Advogados, believes that the modulation is a victory for taxpayers and also has a positive impact on the Federal Government. “With the modulation confirmed, there will be a reversal of provisions related to DIFAL debts, which should generate a favorable effect estimated at R$3.4 billion on federal revenue, expanding the base for Income Tax and CSLL,” explains Andrade.
João Paulo Toledo de Rezende, a tax law specialist and partner at Mazzucco & Mello Advogados, believes that the decision "consolidates the understanding that the complementary law only regulated the distribution of revenues between the federative entities, without instituting a new tax, thus eliminating the requirement of annual prior notice.".