The Superior Court of Justice (STJ) handed down a decision recognizing the deduction of accrued payments of interest on equity (JCP), which include amounts referring to prior years, from the calculation basis of the Income Tax (IRPJ) and the Social Contribution on Net Profits (CSLL).

The JCP are paid by companies to shareholders as a way to remunerate the invested capital, in which the company distributes part of its profits in the form of interest. The distribution of JCP is not mandatory, but it generates a tax advantage for companies that calculate taxes under the real profit regime.

As a general rule, the shareholder who receives JCP has the burden of 15% of withheld income tax (IRRF) and the company accounts for JCP as an expense, being able to deduct this remuneration from the calculation basis of the IRPJ and CSLL. Thus, the company deducts, roughly, 34% of the tax base of IR and CSLL, with the shareholder bearing the IRRF of only 15%. In summary, the JCP decreases the taxable net profit and, consequently, the amount of tax to be paid.

Although the law does not establish deadlines for the payment of interest to shareholders, the issue under debate refers to the deduction of the IRPJ and CSLL when there is a retroactive payment of JCP, referring to past years. In this regard, the Federal Revenue Service understands that deductions for these payments would not be possible, on the grounds that the accrual basis and the legal limit (50%) must be respected.

The Attorney General of the National Treasury will wait for the publication of the decision rendered by the 1st Panel of the STJ to analyze whether it is possible to appeal. However, the taxpayers argue that there are no constitutional grounds to take the matter to the STF, since what is being discussed is a time limitation and not a tax benefit. Retroactive payment of JCP is not prohibited by law. The only rule is that the deduction must be made in the same year as the payment.

In his vote, the rapporteur, Minister Gurgel de Faria, stated that he had decided this case monocratically because there are unequivocal precedents on the subject. The case came to the panel, he added, because the National Treasury claimed that the precedents were not unequivocally settled.

“Both panels are voting in the sense that as of 1997 [when a legislative change occurred] the deduction of JCP, even in relation to fiscal years prior to that in which the profit of the legal entity was realized, is possible,” said the rapporteur, who was followed unanimously (REsp 1971537).