In September 2021, when hearing a special appeal filed by a taxpayer, the 1st Panel of the Superior Chamber of Tax Appeals (CSRF) rendered an important decision on a matter that was very controversial until then. It deals with the possibility of deducting the so-called "retroactive interest on capital" for purposes of the Individual Income Tax ("IRPJ") and the Social Contribution on Net Profits ("CSLL"). According to the decision, the legal entity may deduct, for IRPJ purposes, the interest on that could have been paid to the shareholders/shareholders in base periods prior to that of the resolution. As an example, in 2021, subject to certain criteria and limits, the taxpayer may resolve and deduct the interest on capital that could not be deducted in 2016 or even in previous periods.
Until the advent of this decision, the tax authorities understood that the deduction should respect the competence regime and did not admit the retroactivity of the calculations.
However, according to the new position of the CSRF, the deduction of interest on equity from the taxable income is not subjected, conditioned, or limited to the accrual basis, and the reduction of such amounts from the taxable income may be made after the resolution for its payment or crediting, even if related to previous periods. Also according to the decision, there is no limitation of the periods covered by the resolution of the entity, duly appropriating and deducting the corresponding expense incurred.
Although subject to taxation at source ("IRRF") at the rate of 15%, the deduction may give rise to a significant reduction in the IRPJ and CSLL payable (in the base-period in which the payments or crediting of retroactive interest are decided), especially if we consider that the expected tax reform, under the terms of Bill no. 2,337, submitted to the Federal Senate, indicates that interest on equity capital is to be extinguished.
The decision is not binding on all taxpayers, although it is extremely relevant for decision making by company directors.
BT Law's lawyers are at the disposal of its Clients and other interested parties to assess the issue and advise them on the calculation of the possible benefits.
