It has been years since there has been a definition in the Administrative Council of Tax Appeals (Carf) on the amortization of goodwill, especially with regard to the controversy involving vehicle companies or internal goodwill. This topic has already gone through several phases at the administrative level, and in each of them, the focus changed and the results were defined according to different judgment criteria (with or without application of the casting vote).
Since the extinction of the casting vote in 2020, promoted by Law No. 13,988/20, decisions involving the amortization of goodwill with the use of a vehicle company have been favorable to the taxpayer. Previous decisions were unfavorable. Transactions involving internal goodwill continue to be invalidated by Carf, even in light of the legislation that allowed the casting vote in favor of the taxpayer. There is no consolidation in administrative jurisprudence.
Fortunately, last month (in September), taxpayers were able to breathe a sigh of hope with the judgment, by the Superior Court of Justice (STJ), on the disallowance of amortization of goodwill determined under Law No. 9,532/97. The issue was assessed by the judiciary with caution, resulting in a favorable decision for taxpayers, despite the largely unfavorable history at the administrative level.
The background briefly involves two themes regarding goodwill: transactions using a vehicle company and the possibility of using internal goodwill (operations carried out between companies in the same group/related parties). In general terms, the 1st Panel of the STJ stated that the internal goodwill resulting from corporate reorganization carried out before Law No. 12,973/2014 can be amortized on the IRPJ and CSLL calculation basis.
The Panel, unanimously, understood that Law No. 9,532/1997 did not expressly provide for the impossibility of using goodwill in transactions between related parties or via vehicle company. On the contrary, the prohibition on the use of internal goodwill was only included with Law No. 12,973/2014.
The ministers also stated that the Tax Authorities must demonstrate the existence of a simulation in the specific case to disregard the tax planning carried out. Using this basis of simulation without proof, as done by the Tax Authorities and validated by Carf to support decisions unfavorable to taxpayers, will be prohibited.
And now we ask: considering Law No. 14,689/23, sanctioned at the end of September, which determines that the casting vote of the Carf lies with the president of the Judging Panel – always representing the National Treasury – what will be the repercussions of this issue at the administrative level?
Will judgments that are unfavorable to taxpayers be resumed using the casting vote, leaving the litigation even more bloated?
We believe so. However, the new law brings a positive aspect: for all cases (referring to any discussions submitted to Carf) in which the taxpayer is defeated by the casting vote, there will be the possibility for such taxpayer to exclude the interest and pay only the principal amount with the use of credits resulting from IRPJ tax losses and negative CSLL basis (own or from a controlled or controlling company). But what about the consequences of this practice? Will it not lead to taxpayer distrust in the administrative sphere?
Will Carf, which is a body so respected for its technical quality, also be at the mercy of politics and the need to collect revenue? It is certainly not what we would like or believe. What remains is our vote of confidence so that decisions are truly technical and that we increasingly have uniformity in the judgments of higher courts, whether in the administrative or judicial sphere.