On 24 September 2021, the Federal Supreme Court (Supremo Tribunal Federal, STF), ruled Extraordinary Appeal No. 1.063.187) that certain interest that a taxpayer receives on a late tax refund from the treasury should not be included in the calculation base of corporation tax (IRPJ) or the social contribution to net profit (CSLL). The interest was calculated based on the Brazilian Federal Funds Rate (or SELIC rate).
The STF also found that the interest received by the taxpayer did not result in capital or property increases (which are tax-inducing events for IRPJ and CSLL purposes), but rather that the interest was merely reparation for the damage and loss that the taxpayer for the late tax refund. A similar approach already had been endorsed by the STF in Extraordinary Appeal No. 855,091 in which the STF concluded that default interest received by individuals for late remuneration payments should not be included in their individual income tax (IRPF) calculation basis.
Therefore, the Supreme Court concluded that interest on late tax refunds should not be considered a tax-triggering event for IRPJ or CSLL purposes and should not be included in their calculation base.
