Brazil: Federal Treasury Department publishes public notice for special settlement agreement of debts in administrative or judicial litigation related to goodwill deductions

16 Jan 2025    4 minute read

In brief

On 31 December 2024 the Public Notice of special settlement agreement No. 24/2024 was published, which provides a new special settlement agreement for tax debts in administrative or judicial litigation related to tax goodwill deductions generated in corporate restructuring within the group itself (internal goodwill) and through a company set up solely to enable the amortization (vehicle company) of any amount.

Discounts and payment terms will be determined according to one of the five options set out in the Public Notice.

The deadline for joining the Program is from 2 January 2025 to 30 June 2025.

Contents

Details

The main features of the Public Notice are as follows:

  • Deadline: from 2 January 2025 to 30 June 2025.
  • Eligible debts: debts registered as outstanding debt with the Federal Treasury Department, lawsuits or administrative appeals pending final judgment, in relation to (i) the deduction of goodwill generated in corporate restructuring within the group itself (internal goodwill) through abusive tax planning, in accordance with articles 7 and 8 of Law 9. 532/97, in the period before Provisional Measure 627/13 came into force or (ii) the deduction of tax goodwill through a company set up solely to enable amortization (vehicle company) through abusive tax planning, in accordance with articles 7 and 8 of Law 9.532/97, including the fines related to the above disputes, including qualified fines.
  • Modalities contained in the Public Notice:
      
      Transaction for debits related to goodwill deductions
    Target public

    Any legal entity that is in administrative or judicial dispute, by means of a lawsuit, a motion to stay execution or an administrative claim or appeal pending final judgment, in relation to internal goodwill or a vehicle company.
    Payment options

    Upon joining, the existing deposits linked to the debts to be settled through the settlement referred to in the Public Notice will be automatically converted into federal income.

    After the conversion, the taxpayer can choose one of the options below:

    1.  application of a 65% discount on the total amount of the debt, allowing, after applying the discount, the use of tax losses and the negative Social Contribution on Net Profit (CSLL) calculation base to settle the outstanding amount up to a limit of 10%, observing that the remaining amount must be settled as follows:
      1. down payment of at least 30% in a single installment; and
      2. payment of the remaining amount in up to 12 monthly installments;
    2. application of a 55% discount on the total amount of the debt, allowing, after applying the discount, the use of tax losses and the negative CSLL calculation base to settle the outstanding amount up to a limit of 10%, noting that the remaining amount balance must be settled as follows:
      1. down payment of at least 25% in a single installment; and
      2. payment of the remaining amount in up to 24 monthly installments;
    3. application of a 45% discount on the total amount of the debt, allowing, after applying the discount, the use of tax losses and the negative CSLL calculation base to settle the outstanding amount up to a limit of 15%, observing that the remaining amount must be settled as follows:
      1. down payment of at least 20% in a single installment; and
      2. payment of the remaining amount in up to 36 monthly installments;
    4. application of a 35% discount on the total amount of the debt, allowing, after applying the discount, the use of tax losses and the negative CSLL calculation base to settle the outstanding amount up to a limit of 15%, observing that the remaining amount must be settled as follows:
      1. down payment of at least 15% in a single installment; and
      2. payment of the remaining amount in up to 48 monthly installments;
    5. application of a 25% discount on the total amount of the debt, allowing, after applying the discount, the use of tax losses and the negative CSLL calculation base to settle the outstanding amount up to a limit of 20%, observing that the remaining amount must be settled as follows:
      1. down payment of at least 10% in a single installment; and
      2. payment of the remaining amount in up to 60 monthly installments.
    Payment deadlines

    Payment of the down payment or its installment must be made by the last working day of the month in which the application is made.

    The remaining outstanding amount, after settlement of the down payment, will be divided in accordance with the options above, whereby: a) the first installment must be paid on the last business day of the month following the month in which the down payment is due and b) the remaining installments must be paid by the last business day of the months following the month in which the previous installment is due.

     

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