The Brazilian Supreme Court (STF) has scheduled a ruling tomorrow (12/15) on the limits of res judicata in tax matters. This is one of the most relevant topics in the tax field and, depending on the decision made by the Court, it could have very significant – and even billion-dollar – impacts on taxpayers.  

Under the terms of the paradigm process, RE No. 949,247-CE, in which the STF recognized the general repercussion of the matter (Theme 881), the following should be analyzed: “the limit of res judicata in the tax sphere, in the event that the taxpayer has a final and binding decision in his favor that declares the non-existence of a legal-tax relationship, on the basis of incidental unconstitutionality of a tax, in turn declared constitutional, at a later time, through the concentrated and abstract control of constitutionality exercised by the Supreme Federal Court”.  

In general terms, the core of the discussion is based on whether a decision by the STF, when judged by concentrated control and, in turn, based on the constitutionality or unconstitutionality of a tax, leads to the automatic breaking of the finality of decisions handed down individually, in diffuse control.   

In practice, if the Supreme Court understands that the change in case law on the subject ends the effectiveness of res judicata, the tax authorities will be able to demand the tax again, without the need to file a rescission action against the judgment that previously favored the taxpayer. This means that, in the absence of payment of the tax, the tax authorities may even issue a notice of violation against the taxpayer.  

The relevance of the matter remains evident, not only due to its fiscal impacts, but also due to the possible legal uncertainty that it may generate, since, given that the STF understands that the effects of res judicata in tax matters have ceased, it will be up to taxpayers who have obtained a favorable judgment, even if it has become final, to follow the Court's judgments to assess whether there is a risk that the res judicata will cease to produce effects.