The Superior Court of Justice (STJ) has scheduled for judgment the topic of the deductibility of interest on equity (JCP) related to previous fiscal years, calculated based on retained earnings, from the Corporate Income Tax (IRPJ) and the Social Contribution on Net Income (CSLL) tax bases. The central point of this judgment, which will have binding effect, is to define whether the deduction is restricted to the fiscal year of the deliberation.
The matter could impact companies opting for the “lucro real” (actual profit) tax regime that did not report a tax loss or a negative CSLL tax base and, therefore, paid taxes on their full taxable income.
We highlight 5 points of attention to be observed:
1. JCP is an option for the taxpayer: Article 9 of Law No. 9,249/95 provides for the possibility of remunerating partners and shareholders, calculated based on the company’s net equity and limited by the Long-Term Interest Rate (TJLP). It is an option, not an obligation, and its decision depends on meeting specific economic and accounting conditions, such as the existence of net income, positive net equity, and a positive tax base for IRPJ and CSLL. In the absence of these elements, JCP becomes inapplicable or ineffective. Therefore, its use should be evaluated annually considering the company’s accounting and tax results.
2. JCP as a tax planning instrument: JCP is a legal mechanism to reduce the IRPJ and CSLL tax burden. By turning part of the profit (which would be taxed at 34%) into a deductible expense, the taxable income is reduced. On the amount received as JCP, a 15% withholding tax is levied at the shareholder level. Considering the difference between the 34% corporate tax rate and the 15% withholding rate for shareholders, the consolidated tax burden becomes 19% lower compared to dividend distribution, which is not deductible.
3. Deductibility limit: The legislation expressly provides that the deduction of JCP is limited to the variation of the TJLP applied to the company’s net equity accounts. This limitation aims to prevent the indefinite reduction of taxable income and the use of JCP as a means of tax evasion.
4. Consolidated position of the STJ: The Superior Court of Justice has consistent case law stating that the legislation does not impose a time limit for the deduction of JCP. As decided in several cases, such as AgInt in REsp 2.105.094/PE and AgInt in AREsp 2.403.061/SP, the Court recognizes that it is legitimate to deduct interest calculated in previous fiscal years, reinforcing the taxpayers’ position and providing legal certainty for pursuing judicial measures.
5. Risk of modulation of effects: A crucial point is the possibility that STJ, even if ruling in favor of taxpayers, may modulate the effects of its decision. This means the Court could limit the application of its understanding only prospectively or to companies that filed lawsuits before the judgment date. This practice, aimed at protecting legal certainty and public finances, may prevent companies that did not act beforehand from recovering amounts unduly paid in the past.
JCP represents an efficient tax planning mechanism for companies under the “lucro real” regime. However, given the possibility of modulation of effects, companies that do not file a lawsuit before the judgment may lose the right to apply the benefit retroactively.
Therefore, companies with an adequate profile (consistent real profit, positive net equity, and a solid governance structure) should consider filing a preventive judicial measure to ensure the future exercise of this right and preserve the tax efficiency of their management.
