STF and the ruling on the exclusion of rental income from the PIS and COFINS tax base

Involving an important issue regarding the calculation basis for PIS and COFINS under the cumulative regime, the judgment specifically addresses whether or not income from renting out own property should be included in this calculation basis.

The discussion is based on the interpretation of the concept of billing, which is the basis for calculating these social contributions. The prevailing view is that billing comprises only revenue from the sale of goods, the provision of services or a combination of both, excluding revenue from other activities, such as the rental of real estate.

The Federal Supreme Court (STF) has already ruled on the issue. It declared unconstitutional the expansion of the concept of invoicing by Law 9.718/98, which included revenues other than those from the sale of goods and the provision of services.

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However, after the general repercussion was recognized in 2013, Law No. 9.718/98 was amended to define that billing includes gross revenue from the main activity of the legal entity, which could include revenue from leasing its own real estate, depending on the interpretation.

The STJ’s position in similar cases has been unfavorable to taxpayers. The rulings have considered that income from renting out own property is included in the concept of billing for the purposes of PIS and COFINS taxation.

Thus, the STF’s decision will be crucial in defining whether companies that rent out their own properties as their main or occasional activity will be able to exclude these revenues from the PIS and COFINS calculation basis under the cumulative regime.

Written by Alvaro Melo, Project Coordinator at Drummond Advisors

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