Supreme Court removes taxation of the SELIC rate

Decisions by the Federal Supreme Court (STF), especially related to tax matters, are accompanied by suspense until the end, as they do not always finish when they are over.

In the last days of September, the STF recognized that the Selic Rate levied on the refund of tax overdue is not a net worth increase, giving the taxpayers a considerable victory: “The levying of IRPJ (income tax) and CSLL (social contribution on net profit) on amounts related to the Selic rate received as a result of reimbursement of overdue tax is unconstitutional ” (Topic 962 – RE No. 1.063.187/SC).

The reasoning is based on the fact that the Selic Rate is an index comprised by interest and monetary correction, which aims to restore the value of the currency over time, representing a mere reinstatement of the assets to be returned to the taxpayer – and not a gain.

According to the winning vote of Justice Rapporteur Dias Toffoli, it is not possible to demand Income Tax (IR) or Social Contribution on Net Income (CSLL) on Selic as it has the nature of emerging damages, indemnifying the taxpayer for the period that he/she was not in possession of his/her money, causing neither an increase in assets nor a profit.

The decision binds all federal public administration bodies (general repercussion). Which leads us to the question: is it definitive and can we now celebrate?

Of course not. As soon as the judgment is published, it will be possible for both the Government and taxpayers to “appeal”, through embargoes for clarification, so that any material errors, omissions, obscurities or contradictions in the text are corrected. The tax authorities can, for example, claim the modulation of the effects of the decision.

This is because, despite the current decision of being in line with what was already decided by the STF in the judgment of RE No. 855,091 (Topic 808) in April 2021, when it ruled out the IR levied on late payment interest paid to individuals due to indemnities of labor claims, considered as effective loss recovery (emerging damages), the Superior Court of Justice (STJ) decided otherwise, unfavorable to taxpayers, in the judgment of REsp No. 1.138,695/SC (Topic 505) in 2013 – creating the opportunity for the tax authorities to claim such a modulation now.

Therefore, considering the latest outcomes in the judgments in tax matters by the STF, great care is needed. Although we see it with good eyes, especially because from this thesis, several “baby thesis” (Selic rate on PIS/COFINS, for example) were born, it is certain that the decision is not final and may bring further discussions. We should wait, bearing in mind the utmost importance of always having a judicial measure so as not to run the risk of being left out of any future celebration.

Two Brothers | Milton Hatoum

Two brothers tells the story of twins Yaqub and Omar who, since their early childhood, have a very conflicted relationship. The story addresses the construction of the family since the parents’ marriage, the twins’ relationship with their parents and sister, and has the urbanization of the city of Manaus as a backdrop over the time. Far from being a cliché story about brothers who hate each other, Milton Hatoum describes each one’s personality in a very human and convincing way.