In a virtual plenary session concluded on November 10, 2025, the Brazilian Supreme Court (STF), by majority vote, determined that stand-alone penalties imposed by tax authorities resulting from non-compliance with or errors in ancillary tax obligations (returns, tax documents, bookkeeping, among others) shall be limited to a maximum amount of 60% (sixty percent) of the tax due.
The original case (with general repercussion recognized since 2011) involved the company Eletronorte, which was penalized by the State of Rondônia at 40% of the value of a diesel oil shipment transaction due to failure to issue tax documents. Despite not being subject to taxation at that time due to tax substitution already paid, the state tax authority imposed the penalty for breach of formal duty.
In the judgment:
- The reporting justice, Luís Roberto Barroso, proposed a more restrictive cap (20%) and was joined by Edson Fachin.
- Justice Dias Toffoli proposed up to 60%, which could rise to 100% under aggravating circumstances, a proposal supported by Justices Dino de Mauro, Alexandre de Moraes, Cármen Lúcia, and Nunes Marques.
- The final vote count was 5 votes for the 60% limit, 4 votes for a lower threshold (20%), and 2 votes allowing application in exceptional situations.
- In addition to the limitation, the STF decided to modulate the effects of the decision, which means the new rule will not retroactively apply indiscriminately to all past cases and must observe the parameters established by the Court.
- Scope of Application
2.1. Stand-Alone Penalty for Ancillary Obligation
This refers to “stand-alone” penalties, that is, those imposed independently of a principal debt (or accompanying an ancillary obligation without necessarily involving principal tax due), for violation of ancillary tax obligations: errors or omissions in returns, bookkeeping, tax documents, among others. The decision reinforces that even when there is no principal tax debt, or when it has already been paid or is nonexistent, penalties cannot be applied arbitrarily or in an absolutely disproportionate manner.
2.2. Percentage Limitation in Relation to Tax Due
The penalty amount is now tied to a maximum percentage of 60% of the tax that would have been due. This means that when a taxpayer omits or errs in an ancillary obligation related to tax X, the stand-alone penalty cannot exceed 60% of that tax.
2.3. Effects and Modulation
The modulation determines that the established rule will not apply automatically in some cases to past events, or requires that taxpayers/public authorities evaluate according to “vested rights, perfected legal acts, and res judicata.” It is necessary to review the final judgment and its modulation provisions to understand which specific cases are affected.
For taxpayers who have received infraction notices with stand-alone penalties exceeding 60% of the tax due, this decision opens the path for defense or requests for administrative/judicial review, based on the unconstitutionality of penalties exceeding the new cap.
Preventively, companies should strengthen internal controls over ancillary and documentary obligations, considering that although the cap is set at 60%, there is still provision for aggravating circumstances (which may result in higher or exceptional application), and remain aware that ancillary obligations continue to generate penalty risks.