[Free translation]
In Legal Alert no. 16/2016, we report that the Federal Regional Court of the 4th Region established the understanding that the incidence of IRPJ and CSLL on the amounts received as SELECT TAX, arising from the repetition of judicial or administrative tax liability, is unconstitutional, as well as in the collection of judicial deposits.
This understanding stems from the hybrid nature of Selic Rate (monetary correction and interest). This is because monetary correction aims to preserve purchasing power in the face of the inflationary phenomenon, not consisting of taxable income. On the other hand, the default interest that makes up the SELIC rate has an indemnity nature. Consequently, TRF4 established the understanding that the Selic Tax arising from the repetition of tax liability is not subject to IRPJ and CSLL taxation.
In view of the importance of the matter, it should be noted that recently, on 09/15/2017, the Plenary of the Federal Supreme Court acknowledged the general repercussion of the issue. Therefore, it will be up to the STF to decide the final outcome on this topic.
Lastly, considering that it is only possible to recover amounts improperly collected in the last five years, we recommend to taxpayers who have taxed the IRPJ and CSLL the amounts received as SELIC Rate, arising from the repetition of tax liability (judicial, administrative and deposit withdrawal judicial), to file a competent judicial measure seeking the declaration of invalidity of this tax requirement, as well as to recover the amounts unduly collected in the period specified.
