Profit Sharing (PLR) is a financial incentive program used by many companies as a way of rewarding their employees based on the company’s performance and financial results. It is a benefit that aims to motivate employees to dedicate themselves to the success of the organization, since they share in the profits or positive results achieved.
However, the taxation of PLR, especially when it comes to directors and managers, has been a controversial issue in Brazilian courts. Questions such as whether or not PLR should be taxed and what the criteria for taxation are have been a source of uncertainty for companies.
STJ ruling on the taxation of directors’ and officers’ PLR
The STJ has ruled for the first time on the issue of the taxation of directors’ and officers’ PLR.
Justice Sérgio Kukina, the rapporteur of the case, voted against the taxation of private pension payments, but in favor of PLR.
Justice Gurgel de Faria then asked to be heard in order to make a more in-depth analysis of the issue, due to the novelty of the case. He will now have 90 days to return the case. Three other ministers will also be able to vote.
The STJ ruling is an important milestone in Brazilian tax law. The court’s decision will provide guidelines on an issue that has been the subject of discussion and litigation for a long time.
Written by Marcos Ferreira, Content Assistant at Drummond Advisors