On October 7, 2026, Brazil’s Federal Supreme Court (STF) concluded its ruling on the merits of Extraordinary Appeal No. 835,818 (General Repercussion Theme No. 843). By majority vote, the Court held that presumed ICMS tax credits, amounts that may be deducted from the tax due under applicable legislation, cannot be included in the tax bases of the Social Integration Program (PIS) and the Contribution for Social Security Financing (Cofins).
The general repercussion thesis established by the Court was as follows:
The inclusion of presumed credits of the Tax on the Circulation of Goods and Services (ICMS) in the tax bases of Cofins and the PIS contribution is incompatible with the Federal Constitution.
The majority’s reasoning was based on the premise that presumed ICMS tax credits do not represent newly generated wealth or revenue belonging to the companies. Rather, they constitute legitimate mechanisms of tax incentives and subnational tax expenditure. From this perspective, allowing federal contributions to be levied on these amounts would undermine the fiscal policies established by the States and the Federal District, compromising the balance of Brazil’s federal system.
In practical terms, it is important to emphasize that the thesis is strictly limited to presumed ICMS tax credits granted by the States and the Federal District. It does not automatically extend to other types of tax benefits, such as exemptions, reductions in the tax base, tax deferrals, or general subsidies.
The ruling is relevant to companies that have actually included presumed credits in their calculation of PIS and Cofins. However, it does not provide for immediate refunds or tax offsets, determine credit amounts in advance, or eliminate the need to verify each taxpayer’s tax regime, relevant tax periods, accounting and tax records, supporting documentation, and procedural status.
What Changes for Companies
The ruling constitutes a leading binding judicial precedent for related disputes. The judgment does not, in itself, establish an immediately enforceable and certain tax credit, does not result in an immediate refund, and does not automatically authorize tax offsets without the prior completion of the legally required procedures.
Application and Effects: What Should Not Be Assumed
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Covered by Theme No. 843
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Automatic Extension Should Not Be Assumed
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Presumed ICMS tax credits validly granted by the States or the Federal District.
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Other ICMS tax incentives, such as exemptions, non-taxation, rate or tax-base reductions, and tax deferrals.
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Tax items expressly classified as presumed credits under the applicable legislation and in tax records.
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Financial subsidies, federal incentives, or PIS/Cofins credits governed by specific legislation.
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Companies whose transactions qualify for the presumed ICMS tax credit incentive, subject to documentary evidence.
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Tax credits without supporting documentation, reconciled calculation schedules, or prior compliance validation.
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The BVP Advogados team remains available to conduct an individualized technical assessment of each company’s circumstances and provide guidance on any appropriate measures, in strict accordance with applicable law.
