PLR (profit sharing) paid to officers and directors of companies without INSS: is it possible?

PLR, profit sharing, paid to workers, does not incur in social security taxes (INSS). What about PLR paid to company officers and directors? Does it incur in INSS? Taxpayers interpreted Federal Law No. 10,101/2000 to say no. The tax authorities understood that it did and fined the companies.

After severe arm wrestling in the Administrative Council of Tax Appeals (Carf) and in the Federal Court, on November 7th, in an unprecedented decision on the subject, the 1st Panel of the Superior Court of Justice (STJ), in the judgment of the Special Appeal nº 1,182,060/SC, decided to impose the social security contribution on the amounts paid as PLR to non-employee officers (statutory).

In the Carf, the decisions were unfavorable to taxpayers, judged by a casting vote. In the Judiciary, although not consolidated, the jurisprudence followed a more severe and unfavorable understanding for taxpayers.

In the case now examined by the STJ, the taxpayer stopped paying social security contributions after making PLR payments to its officers and directors. According to the Tax Authority’s position, INSS is only excluded when payments are made to employees called “CLT holders”, that is, under the terms of the Consolidation of Labor Laws (CLT), as determined by Federal Law No. 10,101/2000.

According to the winning vote of the rapporteur, minister Sérgio Kukina, the social security contribution must be levied on the amounts paid as PLR to statutory officers, considered individual taxpayers (not employees), as provided for in article 28, item III, of Law no. 8,212/91.

The question now is: does this understanding apply to all companies? What will the cases analyzed by Carf and the Judiciary be like?

The STJ’s decision has no binding effect, that is, it only applies to the taxpayer party to the specific lawsuit. Does this mean that there is room for discussion in the Judiciary? Yes, there is. However, it is crucial to stay alert. The STJ’s first unfavorable judgment could be a negative reference for future discussions on the topic, making it necessary to internally evaluate the PLR payment structure and the risks involved.