The Brazilian Supreme Court – STF – concluded, on 03/20/2023, the ruling of Extraordinary Appeal No. 796.939, which concerns with the requirement of the isolated fine in cases of non-approval of the declaration of credit offset before the Federal Revenue Service.
In these situations, the RFB issues an Infraction Notice demanding a fine corresponding to 50% of the amount offset and not ratified, even in cases where the taxpayer is still administratively discussing the offset.
The Ministers ruled that this fine violates the principles of reasonableness and proportionality, insofar as it represents a real penalty required due to the legitimate exercise of a constitutional right (request for administrative compensation).
Thus, the STF removed this undue requirement, and established the following assertion:
"The isolated fine, provided for by law, to be levied on the mere refusal of approval of tax compensation is unconstitutional, as it does not consist of an unlawful act with the ability to provide automatic pecuniary penalty."
Given this context, we recommend that the company analyze the existence of infraction notices that require (or required) the referred isolated fine.
It should be noted that it is possible to reverse the assessment through administrative or judicial means, including cases where the taxpayer has already paid the fine.
We are available to evaluate cases individually and advise on the best form of recovery.
