LAUFFER ADVOCACIA obtained an important victory at the Superior Court of Justice (STJ) by guaranteeing the right of taxpayers to continue to offset their credits even after five years have transpired.
As a general rule, the Brazilian IRS does not allow companies to use credits to offset their debts after 5 years. In the understanding of the IRS, this also applies to credits arising from judicial decisions. In practice, the taxpayer simply cannot operate the offsetting anymore due to the "locks" that the electronic system imposes.
In the aforementioned decision, the STJ held that this position violates the taxpayer's basic rights.
In the case under review, the company had qualified for a credit arising from a final and unappealable court decision and was offsetting it on a monthly basis. However, as its debts were very small, it did not "consume" the whole credit within 5 years. At this point, the company was being prevented from continuing to offset its credits under the allegation of the occurrence of the statute of limitations.
The STJ decision held that since the taxpayer is exercising its right (to offset), the statute of limitations cannot initiate. In other words, the taxpayer cannot be punished for the loss of its credit because it does not have enough debts to offset within the "normal period".
With this judgment, the IRSs position was set aside, and it was determined that the company should indeed continue to offset while its credit lasts.
This situation tends to occur more frequently nowadays since many companies are successful in court and have credits that they are not always able to use within the 5-year period.
It is worth seeking the protection of the Judiciary to guarantee the company’s right.
