Santander (SANB11) receives an injunction in the STF not to collect PIS on gross operating income

The bank has already had a positive TRF-4 decision not to collect tax since 2007.

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Aug. 17, 2023, at 12:37 p.m – Updated 10 minutes ago

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STF Minister Dias Toffoli has issued an injunction in favor of Santander (SANB11) for the corporation not to pay PIS on gross operating income until appeal benefits in the lawsuit that expanded the PIS and Cofins account base for financial institutions. Decision from Wednesday night 16.

Toffoli, the decider of the case, agreed with the bank’s argument that federal revenue could already begin to be taxed retroactively and that this would represent “extremely large sums, i.e. billions.”

Santander has had a positive decision by the Regional Federal Court for the Fourth District (TRF-4) not to tax it since 2007, according to the minister. However, in June of this year, the STF decided that the tax should be charged to all financial institutions on total operating income, and not just the usual activity, that is, only the sale of products and services. This allowed the IRS to begin collecting taxes from the banks, including penalties and interest.

“The collection of the tax credit has been suspended since 2007, by court order without suspensive effect. In this sense, and because of the short period provided for payment of the large sums involved in the claim, I understand that it is a matter of keeping the enforceability of the tax credit suspended until the judgment in the Clarification Request.” said the minister in charge of the report, in the decision.

In early August, Santander appealed to the Supreme Court to avoid being charged. In addition to the injunction, he is trying, on the merits, to ensure that the STF decision does not apply to his case or that the June STF decision is only valid prospectively and not retroactively, based on legal certainty.

The bank reversed the amount of R$4.236 billion in the provision in the balance sheet for the first quarter of 2023, prior to the STF ruling, from probability to potential loss, i.e. it did not consider losing the case. In the balance of the second quarter, after the court ruling, the bank provided only R$ 2.672 billion. He said the remaining R$1.5 billion will not be affected by the STF’s decision precisely because it is still subject to appeal.

In June, the STF decided that PIS and Cofins fees should be imposed on all businesses, because it recognizes that the concept of revenue is broader than that of billing. On the other hand, taxpayers claim that only total revenue (from the sale of products and services) can form the tax base.

The thesis has general implications, that is, it affects all financial institutions that discuss the topic in court. The effect is in the billions.

The Brazilian Federation of Banks (Ferapan) estimates that about R$12 billion is at risk. The Federation estimates an impact of R$115 billion, as estimated by the Budget Guidelines Act (LDO).