The Superior Court of Justice (STJ) published yesterday, on 08/26/2024, the judgment rendered on Theme 1174, which addressed the possibility of excluding from the calculation base of the employer’s social security contribution (and consequently, SAT/RAT and third-party contributions) the amounts withheld by the company from its employees, in the form of income tax and social security contributions payable by the employee, as well as amounts paid in co-participation deducted from employees (such as transportation vouchers, meal vouchers, and health/dental plans, among others).
As previously reported, by unanimous vote, in a session concluded on 08/14/2024, following the opinion of the Rapporteur, Minister Herman Benjamin, the Superior Court of Justice decided to maintain the taxation, establishing the following thesis:
“The amounts related to transportation vouchers, meal/food vouchers, health assistance plans (health, dental, and pharmacy assistance), income tax withheld at source (IRRF) from employees, and social security contributions from employees, deducted from the employee’s payroll, constitute merely a collection technique or guarantee for creditor receipt, and do not modify the concept of salary or salary contribution, and therefore, do not alter the calculation base of the employer’s social security contribution, SAT, and third-party contributions.”
With the judgment published, it is evident, however, that there was no proper consideration of the matter. In his opinion, the Rapporteur begins by stating that the topic does not require further discussion, due to the existence of several precedents that discredit the taxpayers’ arguments.
The Minister argued that the deductions recorded for this purpose in the employee’s payroll merely operationalize a collection technique and in no way influence the concept of salary. He also pointed out that there would be no change in the calculation base of the contributions owed by the company to Social Security, SAT, and third parties. Finally, he cites STJ jurisprudence to the same effect.
The reasoning that the withholdings merely constitute a collection technique, without altering the concept of salary, might at most support a decision regarding the taxes withheld. However, for amounts involving co-participation between the company and the employee, the argument lacks any logical basis.
Thus, with the merit judgment published, the STJ’s decision on Theme No. 1174, which is binding, must be applied to all taxpayers. However, there is still the possibility of filing appeals against the decision, even though the merit has already been decided.
It is noteworthy that when prompted to rule on the matter, the Federal Supreme Court, during the judgment of Theme No. 1.221, dismissed the general repercussion regarding IRRF and withheld INSS, understanding that the discussion is of an infraconstitutional nature. However, the STF did not rule on the social security contribution concerning amounts paid in co-participation by employees.
The Tax Law Department of Marins Bertoldi Advogados remains attentive to developments in the matter and is available to clarify any doubts on the topic and delve into it within each business reality.
By Enrique Grimberg Kohane and Daiana Oliveira
