In a recent decision this week, the Superior Court of Justice confirmed an important precedent for taxpayers when regarding tax purpose deduction of goodwill from M&A transactions on the cases of the use of internal goodwill and with vehicle companies.

The Tax Authorities have the thesis that any corporate transactions that give rise to goodwill in which the so-called vehicle companies are used must be considered as simulated transactions, an therefore illegal, as are illegal such transactions that only involve companies from the same group, known as “internal goodwill”.

However, taxpayers can obtain favorable decisions, canceling infraction notices to collect taxes drafted based on this understanding, when it is possible to prove the economic basis of the corporate structure used in the operation that generated the goodwill.

It is worth transcribing the following excerpt registered in the summary of the STJ decision: “If the concern of the administrative authority is regarding the existence of exclusively artificial relationships (such as absolutely simulated ones), it is up to the Tax Authorities, case by case, to demonstrate the artificiality of the operations, but never assume that the goodwill generated between dependent parties or with the use of a “vehicle company” would, in itself, be abusive.”