The Supreme Court has resumed and concluded the trial of the Federal Government request for clarification in the case of exclusion of the ICMS (State VAT) from the basis of PIS/COFINS (federal social contributions on revenue).
Since 2017, taxpayers have been waiting for the analysis of the motion for clarification filed by the Federal Government in this case. Among the issues under discussion were the following: (i) the modulation of the effects of the decision that ruled unconstitutional the inclusion of VAT in the PIS/COFINS calculation basis in 2017; and (ii) the quantification of the VAT to be excluded from the calculation basis of those contributions, whether the VAT shown on the invoices or the VAT actually paid by taxpayers (debts less input credits).
By 8 votes to 3 the Justices also declared that the VAT to be excluded from the calculation basis of PIS and COFINS contributions should be the VAT shown on the invoices, and not the VAT actually paid by taxpayers.
Also by 8 votes to 3, the Justices decided to limit the effects of the decision, to only produce effects from the date of the first trial, that is, March 15 of 2017, with the exception of taxpayers who had filed a lawsuit until that date.
It means that taxpayers who filed lawsuits after the date set by the Supreme Court, or who decides to file a claim in the future, will only be able to recover amounts overpaid from March, 2017 onwards.
The chart below summarizes the possible situations and the effects of this decision on them:
| Date of filing of the action | The decision became final? | The decision mentioned the nature of the VAT? | Effects and Alternatives |
| Before 03/15/2017 | Yes | Mentioned the VAT indicated in the invoices. | Full recovery of the tax credit.
Well-defined and greater security. |
| Before 03/15/2017 | Yes | Did not mentioned the nature of the VAT. | Full recovery of the tax credit.
Greater security to pursue the full credit administratively. |
| Before 03/15/2017 | Yes | Mentioned the VAT paid by taxpayers. | 2 years for taxpayer to file a rescissory action to claim the VAT shown on the invoices. |
| Before 03/15/2017 | No | N/A | Should be decided in favor of the taxpayer, for the VAT shown on the invoices. Recovery of tax credit related to the five years prior to the filing onwards. |
| After 03/15/2017 | Yes | Mentioned the VAT indicated on the invoices. | Recovery from 03/15/2017 onwards. The National Treasury can file a rescissory action within 2 years to question the previous credit. |
| After 03/15/2017 | Yes | Did not mentioned the nature of the VAT. | Recovery from 03/15/2017 onwards.
Greater security for claiming in the administrative sphere the VAT shown on the invoices. National Treasury can file a rescissory action within 2 years to question the previous credit. |
| After 03/15/2017 | Yes | Mentioned the VAT paid by taxpayers. | Recovery from 03/15/2017 onwards. National Treasury can file a rescissory action within 2 years to question the previous credit.
2 years for taxpayer to file a rescissory action to claim the VAT shown on the invoices. |
| After 03/15/2017 | No | N/A | Should be decided in favor of the taxpayer, for the VAT shown on the invoices, regarding the recovery of the tax credit from 03/15/2017 onwards. |
Despite the modulation of effects, the fact is that the Supreme Court’s decision represents a great victory to the taxpayers. The decision in question could, in theory, be the subject of new appeals by the National Treasury, which, however, seems unlikely to us, and even more unlikely that new appeals would be upheld by the Court.
