The 1st Panel of the Superior Court of Justice (“STJ”) understood, by majority of votes, that the 30% limit for taking advantage of tax losses should also be applied to cases in which the company is extinguished.

The decision under analysis was rendered in the judgment of REsp 1,805,925/SP, brought by the National Treasury in São Paulo against a decision by the Federal Regional Court of the 3rd Region in favor of Abril Comunicações, which had understood as possible the full compensation of tax losses of a company that had been incorporated, without observing the 30% limit.

In practical terms, the effect of this decision is the restriction of the right to offset tax losses accumulated by taxpayers, since the moment of extinction would be the last time the company could use these credits. Thus, depending on the form and conditions in which certain corporate reorganizations are carried out, there will be an irremediable loss of these amounts, given the impossibility of their subsequent use.

In June last year, when analyzing the issue, the Supreme Court considered the constitutionality of the 30% lock, without entering, however, in the analysis of exceptional situations such as the extinction of companies. In the case in question, it is also possible to appeal to the same STF to analyze the issue and verify whether its understanding will also be applied to the situation described.

Our team is available to assist in this and other tax law issues. Further information by e-mail: rmarques@zaslaw.com.br or zaslaw.com.br.