In a recent decision, the Administrative Council of Tax Appeals (“CARF”) brought an important precedent concerning the social security levies on amounts arising from profit sharing plans (“PLR“). The precedent was in the sense that Law 10.101/2000 did not stipulate a deadline for signing the PLR agreement, nor did it require that it be published in the year prior to the year in which the targets were determined.
This decision was handed down by the 2nd Panel of the 4th Chamber of the 2nd Section of the CARF, annulling the tax assessment of ArcelorMittal Brasil, based on the new model for breaking judgments. In this new model of trial, inserted by Law n. 13,988/2020, in case of a tie, the taxpayer wins.
The inspection had found that the company signed its PLR agreements around the month of May of the year of reference of the results, when there would be a little more than half of the fiscal year left for the assessment of the fulfillment of the goals. Therefore, the situation would not be within the concept of “previously agreed upon goals and results program” required by article 2, § 1, inc. II of Law n. 10.101/2000.
However, according to the winning vote, cast by Councilor Ana Claudia Borges de Oliveira, the enjoyment of the tax exemption on the amounts credited as profit or result sharing presupposed only the compliance with the requirements of Law 10101/2000, among which there was no need for an agreement before the beginning of the fiscal year.
Thus, the PLR agreement would have as requirements: to have clear and objective rules as to the establishment of the substantive rights of participation and the adjective rules, including mechanisms for gauging the information pertinent to the fulfillment of what was agreed upon, periodicity of distribution, period of validity, and deadlines for reviewing the agreement, and the following criteria and conditions, among others, may be considered: i) the company’s productivity, quality or profitability indexes; ii) programs with previously agreed upon goals, results, and deadlines.
Thus, as long as the negotiations of the PLR agreement precede the payment, the date the document is signed should not have the power to denature the agreement.
It is however important to clarify that the judgment highlighted here refers to PLR agreements signed between the years 2014 and 2015, i.e., in a period prior to the effectiveness of the changes to Law 10.101/2000, included by Law 14.020/2020. In fact, since November 6, 2020, there is an express legal provision in the sense that the rules established in a signed agreement are considered previously established: (i) before the prepayment, if any; and (ii) at least ninety (90) days before the payment of the single installment or the final installment, when there has been an advance payment.
The changes brought by Law 14.020/2020 aimed precisely to clarify the legal text, seeking to reduce divergences in the interpretation of Law 10.101, providing greater legal security for employers.
The above text is not exhaustive and does not represent or replace a specific recommendation from an analysis of the case.