In a virtual judgment concluded on August 16, 2024, the Brazilian Supreme Court (STF) dismissed the possibility of modulating the effects of the decision made in April of this year, which had determined the incidence of PIS/COFINS on income derived from the rental of movable and immovable property, regardless of the timeframe.

The central point of controversy lay in the interpretation of the term “revenue,” particularly concerning the expansion of the concept established by the Supreme Court, which had confined it to “revenue from the sale of goods or the provision of services.” The goal was, therefore, to recognize the impossibility of categorizing rental income as revenue from the provision of services or the sale of goods, which would consequently exclude PIS/COFINS from being levied on such income.

However, in the merits decision of April, the prevailing opinion was expressed in an open dissent by Minister Alexandre de Moraes, asserting that the concept of revenue provided in Article 195, I, of the Federal Constitution, with the wording prior to Constitutional Amendment 20/1998, does not have a restrictive interpretation limited to the sale of goods and services, encompassing the entirety of income from business activities. Furthermore, the tax is valid even for the period before Constitutional Amendment 20/1998.

In this regard, the STF plenary, by a majority, established the thesis: “The imposition of PIS and COFINS contributions on income derived from the rental of movable or immovable property is constitutional when it constitutes a business activity of the taxpayer, considering that the economic result of this operation coincides with the concept of revenue or gross income, taken as the sum of income from business activities, as assumed in the original wording of Article 195, I, of the Federal Constitution.”

The judgment represented a shift in the Court’s position, prompting taxpayers to file motions for clarification, seeking the modulation of the decision’s effects. However, the STF plenary, unanimously, rejected both motions for clarification, following the opinion of the Rapporteur, Minister Luiz Fux.

The Tax Law Department of Marins Bertoldi Advogados remains vigilant to the developments of this issue, awaiting the publication of the clarification ruling, and is available to address any questions on the topic and delve into each business reality.

By Enrique Grimberg Kohane and Daiana Oliveira