The Superior Court of Justice (STJ) has revised its interpretation concerning the timeframe for offsetting tax credits acknowledged through final judicial decisions. In a recent ruling by the Second Panel, the justices established that taxpayers must fully utilize their credits within five years from the date of the final judgment (res judicata) that recognized the right.
Previous Understanding:
The five-year period was considered applicable only to the initiation of the offsetting procedure. The credits could be used without a time limit until fully exhausted.
Current Understanding:The five-year term now applies both to the commencement and completion of the offsetting process. In other words, if the taxpayer does not fully use the credit within this period, the remaining amount is forfeited.
Key Aspects of the Decision:
- The rule is based on Article 168, II of the National Tax Code (CTN), which establishes a five-year period to claim the refund of taxes unduly paid.
- The STJ adopted the “overruling” doctrine, thereby overturning its prior precedent from the Second Panel that allowed credits to be used until exhaustion, regardless of time.
- The decision aligns with precedents from the First Panel and is grounded in the principle of legal certainty, ensuring greater predictability for the Public Treasury.
Impacts on Taxpayers:
- Companies with accumulated credits must plan for full utilization within the five-year term.
- Taxpayers intending to benefit from longer timeframes for credit utilization should consider filing declaratory actions for tax recovery, which may allow for the receipt of credits via court-ordered payments (precatórios), rather than solely through administrative offsetting.
- The ruling may be particularly burdensome for companies with high-value credits but limited monthly offsetting capacity.
Our Recommendation:
- Immediately reassess your company’s strategy for utilizing judicially recognized tax credits.
- Consider filing declaratory actions in high-value cases to ensure greater flexibility in recovering such credits.
- Closely monitor applicable legislation and case law to avoid unexpected issues related to deadlines and offsetting procedures.
Our tax team is available to answer any questions and support your company in maximizing the efficient use of judicial tax credits.