The majority of ministers of the Federal Supreme Court (STF) understood that IRPJ and CSLL are not levied on amounts related to the update by the Selic rate received due to the repetition of undue tax payments, reimbursement, refund and compensation of tax credits paid unduly or in excess.

In the judgment of RE 1,063,187, with recognized general repercussions (Theme 962), the rapporteur of the case, Minister Dias Toffoli, highlighted in his vote that “interest on arrears is outside the scope of income tax and CSLL, as it is primarily intended to compensate for actual losses and decreases, and does not imply an increase in the creditor's assets”.

The minister also emphasized that the interest on the repayment of undue payments is in the nature of emerging damages, and not of lost profits. In this case, there is no need to talk about taxation by IRPJ and CSLL since there is no increase in assets.

Dias Toffoli's understanding followed the same line of reasoning expressed in a recent ruling on a similar topic, for which he was also the rapporteur. This was RE 855,091, which ruled that income tax would not be levied on interest on arrears received in the event of late payment of wages. At that time, Toffoli understood that interest on labor benefits is intended to replenish assets, not increase them, therefore, the levy of income tax is not justified.

With the STF vote on Theme 962, the following thesis was established: “The levy of IRPJ and CSLL on amounts related to the Selic rate received as a result of the repetition of undue tax payments is unconstitutional". As a result, there was a change in the understanding of case law, especially that of the Superior Court of Justice (STJ), which has a position favorable to the tax authorities, in the sense that interest and monetary correction are in the nature of an increase in assets and, therefore, must be taxed.

It remains to be seen whether the STF will modulate the effects of the decision.