In an important precedent on the topic, the Brazil’s Regional Federal Court of the 2nd Region (Tribunal Regional Federal da 2ª Região/TRF-2) recognized a technology and means of payment company’s right to use PIS and COFINS credits for expenses inherent to adaptation to the country’s General Data Protection Law (Lei Geral de Proteção de Dados/LGPD).
Brazil’s Superior Court of Justice (Superior Tribunal de Justiça/STJ) had defined, under the repetitive appeals system, that the concept of input for PIS and COFINS credits must be assessed in light of the essentiality or relevance criteria. Thus, the STJ defined that an essential good or service is one on which production of the product to be sold by the company depends. On the other hand, a relevant good or service is one that, although not essential, is part of the production process, either because of the production chain’s characteristics or by legal imposition.
Qualification of expenses inherent to means of payment companies’ adaptation to the LGPD as inputs complies, at first sight, with the STJ’s concept of relevance, especially with regard to obligation by legal imposition – in this case, Law 13.709/2018. Since adaptation to LGPD terms is mandatory, expenses from implementation and fulfillment of obligations are considered an essential input to activities carried out by means of payment companies.
Aside from this condition, it is important to emphasize that expenses inherent to handling and processing information are essential to means of payment companies’ core activities, since the technological solution they offer – means of payment – allows for the processing of hundreds of transactions daily.
Thus, as well observed by the reporting federal judge, “since this is a mandatory investment, essential to the achievement of the petitioner’s social objectives, and a necessary security measure to protect the data of its customers and third parties, as well as subject to sanctions for non-compliance with imposed regulations, expenses inherent to adaptations to the LGPD should be recognized as inputs for the purpose of using the PIS and COFINS non-cumulative system.”
In view of the characteristics of the solutions offered by means of payment companies, and in view of the precedent analyzed above, we understand that the use of PIS and COFINS credits for expenses inherent to adaptation to the LGPD is an important alternative for the sector’s players’ better tax efficiency.
For more information, please contact our Tax Advisory team at Barcellos Tucunduva Advogados: ([email protected]).