The Brazilian Supreme Court (STF) has recently ruled that indirect export of products through a trading company is not subject to social contributions (suit for the declaration of unconstitutionality, local acronym ADI No. 4735 and extraordinary appeal, local acronym RE, No. 759.244).
The dispute was whether the tax immunity set forth in the Brazilian Constitution (article 149, § 2, I) was to be applied. Under such constitutional provision, social contributions and the contribution of intervention in the economy are not to be levied on export revenue.
The Supreme Court held that there is no obstacle in applying the tax immunity for indirect export because it has the same purpose, and therefore shall have the same tax treatment, of direct sales abroad.
As a result, the Supreme Court issued a guidance with general repercussion (topic 674), determining that the tax immunity of article 149, paragraph 2, clause I of the Constitution also applies to revenue generated from indirect export, i.e., export in which an intermediary takes part of the negotiation.
This is a very important decision that will allow parties to seek reimbursement of social contributions unduly paid in indirect export transactions in the past years.
Our tax practice team is ready to provide guidance and further information on this topic.
