Fábio Bernardo
Lawyer at Marcos Martins Advogados
In a recent ruling in favor of the taxpayer in a case involving the extinction by merger of the company AES Tietê Energia S.A – CARF ‘s Superior Chamber of Tax Appeals removed the 30% limit on offsetting tax losses and the CSLL calculation base.
Several companies have already tried to get rid of this limit through lawsuits, but the Federal Supreme Court has ruled that the limit is constitutional in normal situations. Even with this understanding, there is still judicial and administrative controversy over specific situations.
One such situation is the extinction of a company through incorporation. When a company is incorporated, its legal personality is extinguished and the incorporator cannot take advantage of the losses accumulated by the extinguished legal entity. In practice, the accumulated losses are lost.
Because of this specific situation, many taxpayers argue that, prior to extinction by incorporation, they should be allowed to offset losses without any restrictions.
The limitation imposed by the legislation prevents companies from offsetting the accumulated tax loss and the negative CSLL calculation basis against the total profit generated in the calculation period. Thus, if a given company, opting for the real profit method, has R$1 million in accumulated losses in previous years and earns R$500,000 in profit in a given period, the offsetting of accumulated losses is limited to R$150,000 (30% of R$500,000), with IRPJ/CSLL levied on the remainder.
CARF has already had the opportunity to rule on this issue in favor of taxpayers, but in judgments that ended in a tie. This recent judgment is the first we have heard of in which a majority was formed in favor of excluding the lock, with a favorable vote by the president of CARF, who is a tax auditor, which shows that the administrative court has been leaning towards admitting the thesis defended by taxpayers.
AboutMarcos Martins Advogados: Founded in 1983, the firm is highly regarded in the areas of Corporate, Tax, Labor and Business Law. Based on values such as commitment, ethics, integrity, transparency, responsibility and the constant specialization and improvement of its professionals, the firm positions itself as a true partner for its clients.
