BRAZIL Trends and Developments Contributed by: Raquel Novais, Marco Behrndt, Daniella Zagari and Clara Gomes, Machado Meyer
concern compliance with statutory requirements, the existence of a valid business purpose, and the distinc - tion between legitimate tax planning and structures characterised by the tax authorities as artificial. In 2025, the issue remained highly prominent before the CARF’s First Section, with more than 180 decisions addressing, directly or indirectly, the deductibility of goodwill amortisation for IRPJ – Imposto de Renda sobre Pessoa Jurídica (Corporate Income Tax) and CSLL – Contribuição Social sobre o Lucro Líquido (Social Contribution on Net Profits) purposes. The case law remains highly fact-sensitive. The CARF has accepted that the use of special-purpose vehicles (SPVs) does not, in itself, prevent goodwill amortisa - tion, particularly where the structure is supported by commercial rationale. Tax assessments have nev - ertheless continued to be upheld in cases involving goodwill generated through intragroup transactions. The absence of economic substance and the lack of an effective merger of the investor’s and investee’s assets and liabilities have also been relied upon by both the tax authorities and the CARF to challenge deductions. At the judicial level, the first goodwill amortisation cas - es have recently reached the STJ, which is expected to play a central role in defining the applicable legal standards. To date, the Court has attached consider - able weight to the factual findings and legal conclu - sions of the lower courts, particularly when assessing whether appeals may be admitted for review, given the procedural restrictions on the reassessment of facts and evidence. In certain cases, the STJ has revisited concepts such as intragroup goodwill, validating intra - group goodwill accrued before Law 12.973/2014, at times departing from the approach adopted by appel - late courts. The legal framework, however, remains unsettled, particularly in relation to abuse, business purpose, and artificiality. The STJ has also indicated that formal compliance with statutory requirements is not necessarily suffi - cient, on its own, to secure deductibility. Economic substance, arm’s-length conditions, and a reasonable expectation of future profitability supporting the good - will premium have been treated as relevant factors. At the same time, the Court has not rejected SPV struc -
tures as a matter of principle, instead adopting a case- by-case approach. Recent decisions also highlight the importance of procedural issues, including limits on factual review and the evidentiary burden applicable in cases involving allegations of abusive tax planning. Stock options Stock option plans have become increasingly promi - nent in Brazilian tax and labour litigation due to the ongoing debate over their legal characterisation, whether as commercial instruments or compensatory arrangements. The central issue is whether gains arise from an investment opportunity, involving market risk and payment of an exercise price, or from disguised remuneration for services. At the judicial level, the STJ has addressed the matter under Theme No 1,226. The Court held that the legal nature of stock option plans must be determined by their actual characteristics, rather than by their formal designation or contractual labelling. The STJ empha - sised that plans involving voluntariness, consideration through payment of an exercise price, and effective exposure to market risk tend to be classified as com - mercial arrangements and, therefore, are not treated as remuneration. Conversely, the absence of these elements may allow recharacterisation as compensa - tory, with corresponding tax and social security con - sequences. Each plan, therefore, requires a fact-based assess - ment, consistent with the STJ’s substance-over-form approach. Contractual terminology and corporate structuring are not determinative. The relevant inquiry concerns the effective allocation of risks and benefits and the existence of a genuine investment dynamic. In this context, detailed contractual, corporate, and accounting documentation is essential to support the intended characterisation and align the plan with the The tax treatment of bonuses and commercial allow - ances granted by suppliers to retailers is a significant controversy in PIS – Contribution para o Programa de Integração Social (Contribution for the Social Inte - gration Programme) and COFINS – Contribuição para o Financiamento da Seguridade Social (Contribution criteria established in STJ case law. Bonuses and commercial allowances
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