In a decision rendered under the repetitive appeals procedure (Theme 1,372), the First Section of the Superior Court of Justice (STJ, Brazil’s highest appellate court for non-constitutional federal law) established the legal thesis that the tax rate differential of the state VAT (ICMS-Difal) does not form part of the calculation base for PIS and Cofins (federal social contributions on gross revenue).
With this ruling, which consolidates the settled case law of the court’s public law panels, special appeals and interlocutory appeals that had been stayed pending the outcome of the repetitive proceeding may now resume processing.
What is ICMS-Difal?
ICMS-Difal represents the difference between the ICMS rate of the destination state of the goods and the interstate rate applied in the state of origin. This mechanism was created to balance tax collection among Brazilian states in interstate transactions destined for final consumers who are not registered ICMS taxpayers.
The reporting justice for the appeals, Justice Gurgel de Faria, explained that this method does not alter the underlying nature of the ICMS levied on interstate circulation. According to the justice, ICMS-Difal is the very same tax, calculated differently to avert a “tax war” between states by setting distinct rates for the subsequent allocation of collected revenues.
Grounds for Exclusion from PIS and Cofins
The decision rests on the principle that ICMS is a single tax that, by operation of law, does not effectively enter the taxpayer’s net equity. The rate differential merely represents an amount allocated for distribution between the states involved in the transaction.
The reporting justice emphasized that the constitutional concept of gross revenue excludes ICMS from the PIS and Cofins calculation base. “It is not, therefore, a matter of excluding an amount that would otherwise integrate the calculation base, but of recognizing that amounts corresponding to ICMS do not constitute taxable events for these levies,” he summarized.
The thesis established under Theme 1,372 ensures coherence with foundational precedents on this matter:
- Theme 69 of the STF: Landmark decision under general repercussion by the Supreme Federal Court (STF) that excluded ICMS from the PIS and Cofins calculation base.
- Theme 1,125 of the STJ: Ruling that excluded ICMS levied under the tax substitution regime (ICMS-ST) from the base of these same contributions.
Modulation of Effects and Legal Certainty
Following the approach of the Supreme Federal Court, the First Section of the STJ modulated the temporal effects of the ruling. The new precedent takes effect as of March 15, 2017—the date when the binding precedent was established by the Supreme Court in Theme 69—safeguarding judicial lawsuits and administrative proceedings already pending on that date.
According to the reporting justice, this measure upholds the parameters of legal certainty provided under Article 927, paragraph 3, of the Brazilian Code of Civil Procedure (CPC), while reinforcing alignment with the STF ruling.
Practical Impact
This binding precedent established in the ruling (REsp 2,174,178) must now be mandatorily observed by all lower courts in Brazil when adjudicating similar cases, pursuant to Article 927, item III, of the CPC. The decision delivers predictability for companies engaged in interstate transactions, confirming that the portion corresponding to ICMS-Difal is not part of the gross revenue subject to federal social contributions.
This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.
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