Planning is good and the STF likes it

Taxpayer has good grounds for planning

It is common knowledge that the preference is for less burdensome taxation. What was not known to all is that the Federal Supreme Court (STF) would defend those who, legally, plan to avoid legal relationships that could give rise to a more costly tax obligation.

On a frequent basis, taxpayers come across tax assessments that overturn lawful transactions – which only seek a tax benefit within legal boundaries – on the grounds that they would be “abusing” the form to evade their tax obligations.

On the administrative level, more specifically in the Administrative Council for Tax Appeals (Carf), the argument that there would be an absence of a business purpose in tax plannings to disregard legal acts has somewhat become a cliché. Fortunately, there has been good news! At the judicial level, the STF, by means of a vote by the Minister Carmen Lúcia at the end of June, maintained a position in the proceeding ADI No. 2446 in the sense that “the rule does not prohibit the taxpayer from seeking, through legitimate means and coherent positions within the legal framework, tax savings, by carrying out its activities in a less burdensome manner, and, thus, paying less taxes when no taxable event has been configured which occurrence has been lawfully avoided”.

The Minister also clarified in her vote that the provision of the National Tax Code (CTN), known to be the general anti-avoidance rule (art. 116, sole paragraph), is unduly characterized under this pretext, since it has the real objective of prohibiting tax evasion (the rule is anti-evasion – according to the STF’s position in the judgment), which is nothing more than an escape from the tax obligation actually due.

This understanding must, therefore, inhibit the inspection of assessing and imposing any taxes from taxpayers without a legal provision. This must be the case since transactions can only be disregarded if fraud or simulation (tax evasion) is demonstrated.

Although this proceeding has not yet terminated, only a minister’s vote is needed to have a majority vote that will confirm this position. With this, taxpayers will have good grounds to demystify the interpretation given to their lawful tax plannings and the expectation is that they will have greater security to choose less expensive routes, without worrying about too many incorrect tax infraction notices.

By Maria Paula Carvalho Molinar, associate at Candido Martins Advogados