On August 22, 2018, Justices of the 3^rd Section of the Superior Court of Justice (“STJ”), by 6 votes to 3, denied certiorari for Habeas Corpus no. 399,109, filed by Public Defensory of Santa Catarina’ State, which pleaded for the non-application of the penal law against managers and/or partners that collected the ICMS (Brazilian equivalent to VAT) from clients but did not repaid the Treasury. Such conduct was considered tax embezzlement, a felony whose charge may be of 6 months to 2 years of imprisonment, plus a fine.

The decision is relevant once it standardizes the interpretation of STJ about the matter, once there was a divergence between the different Sections of the Court.

One of the main arguments, expressed by the Rapporteur, Justice Rogério Schietti Cruz, was that such conducts should be discouraged, as it is the taxpayer role to seek for fundings from third parties, including in financial markets to pay their taxes, rather than simply collect the amount due but pay the due amount to the Treasury.

The decision is controversial especially concerning in proving malicious actions; when there is a clear intention in collecting and not paying taxes, as such malicious actions should be supported by evidences, which are hard to find in cases like these.

Finally it is important to note that this judgment may be used by the Public Prosecution Offices in face of taxpayers that did not pay taxes to the treasury, even though they have collected from costumers.

The consequences of this decision should be taken cautiously, including the future position of the Federal Supreme Court (STF).

Please, if necessary, contact us for further clarifications:

zaslaw@zaslaw.com.br