STF will not rule on the merits of the thesis that limits the calculation base of third-party contributions

Last Wednesday, the Brazilian Federal Supreme Court (STF) concluded the judgment of General Repercussion Topic No. 1,393 and unanimously decided not to hear the case regarding the limitation of social security contributions to third parties (INCRA, wage-related contributions, and the “S System”) to the ceiling of 20 minimum wages. The Court determined that the issue does not involve constitutional matters, as it concerns the interpretation of infra-constitutional norms and, therefore, lacks general repercussion.

To provide context, the legal thesis was initially examined by the Superior Court of Justice (STJ) under Repetitive Appeal Topic No. 1079. In that ruling, the STJ reversed its previous position and held that the limitation of the calculation base for such contributions was unwarranted.

Due to the change in its understanding, the STJ decided to modulate the effects of its decision. Thus, the limitation of the calculation base for third-party contributions could still apply to taxpayers who: (i) had filed lawsuits or administrative claims regarding the issue prior to the publication of the ruling [October 25, 2023]; and (ii) had already obtained a favorable court decision. Several appeals were filed against this decision, all of which have been dismissed, except for a Motion for Divergence filed by the Federal Government and an Extraordinary Appeal filed by taxpayers.

The STF’s recent ruling in General Repercussion Topic No. 1,393 means that the merits of the STJ’s decision will not be reviewed by the Supreme Court. In other words, as to the substance of the matter, the STJ’s decision will stand as final. Nevertheless, the STF is still expected to analyze the criteria for the modulation of effects when judging the taxpayers’ Extraordinary Appeal against the STJ ruling.

The FAS tax team remains available to clarify any doubts regarding this matter and to assist taxpayers as needed.