Article

Fernando Freitas Fernandes; Renata Gomes Vicentin

DOI: 10.22167/2675-6528-202602218

Article derived from a Final Course Work (TCC), with content based on the student’s original work and adapted to the editorial format of the Revista E&S with the support of the ResumeAI tool, an artificial intelligence solution developed by the Pecege Institute for textual synthesis and organization.

Abstract

The study analyzed the interpretation and application of the definition of inputs for the purpose of crediting the Social Integration Program (PIS) and the Contribution for the Financing of Social Security (COFINS) under the non-cumulative regime, in light of the understanding established by the Superior Court of Justice (STJ) in the judgment of Special Appeal No. 1,221,170 (Theme 779). The objective was to examine the legal limits of the use of these credits, considering the criteria of essentiality or relevance established by the STJ’s jurisprudence. Documentary and jurisprudential research was conducted, with an analysis of representative rulings from the Administrative Council of Tax Appeals (CARF) and the STJ, covering periods before and after Theme 779. Complementarily, bibliographic research and studies of two concrete CARF cases were carried out, with a qualitative approach, to verify the practical application of the criteria. It was found that the STJ set aside the automatic application of the IPI input definition, consolidating the criteria of essentiality and relevance. However, the analysis of CARF judgments showed that, although there was formal recognition of the STJ precedent, its application was modulated according to the nature of the business activity, proving to be more restrictive for resale companies. The concrete cases illustrated that freight credits were treated differently, depending on the link of the expense to production or resale. It was concluded that the definition of inputs remains a sensitive point in the tax system, and the correct use of credits demands rigorous case-by-case analysis, based on compliance with judicial precedents and current regulatory limits, to avoid disallowances and penalties.

Keywords: COFINS; Credit; Inputs; PIS.

1. Introduction

The Brazilian tax system is recognized for its high normative and instrumental complexity, characterized by constant changes and a multiplicity of taxes on business operations. This scenario significantly impacts companies’ operational costs, directly influencing their market competitiveness. Given this context, lawful tax reduction strategies become essential elements of corporate fiscal management. Among these strategies, the possibility of utilizing tax credits for companies under the non-cumulative regime of the Social Integration Program (PIS) and the Contribution for the Financing of Social Security (COFINS) stands out, whose correct use can generate significant savings.

Historically, the tax authorities maintained a conservative stance on classifying operations eligible to generate tax credits related to PIS and COFINS, such as those linked to the acquisition of inputs. However, in 2018, the Superior Court of Justice (STJ), when judging Special Appeal number 1,221,170 (Theme 779), interpreted the normative instructions of the Federal Revenue Secretariat (SRF) numbers 247/2002 and 404/2004, thus relaxing the definition of inputs for credit purposes. This relaxation was based on criteria of essentiality or relevance.

Although the understanding consolidated by the STJ has broadened the comprehension of the concept of input and promoted greater legal certainty, interpretive divergences still subsist. These divergences occur especially in the administrative sphere, where the application of the criteria of essentiality or relevance is conditioned by the particularities of the taxpayer’s economic activity. The complex Brazilian tax regulations favor various theses and interpretations, aiming at the lawful reduction of taxes. Machado (2022) reinforces that the taxpayer is not obliged to choose the method that implies a greater tax burden, as long as they do not commit illegalities. However, due to possible interpretation divergences, the use of tax credits may be distorted, characterizing itself as a potentially abusive practice. Pereira (2024) describes the abuse of right as the exercise of a subjective right that manifestly exceeds the limits imposed by its economic or social purpose, acting contrary to good faith and good customs. In this sense, the definition of inputs for PIS and COFINS crediting must adhere to the parameters defined by the judgment of Theme 779 of the STJ, not admitting an extensive interpretation. The unrestricted claiming of input credits that do not observe the criteria of essentiality and relevance may be disallowed by the tax authorities, constituting an abuse in the exercise of the right to credit.

The utilization of PIS and COFINS credits, although representing a relevant mechanism for rationalizing the tax burden, requires individualized technical analysis and strict adherence to regulatory and jurisprudential limits, under penalty of establishing tax liabilities and applying monetary penalties. Therefore, the present study aims to analyze the interpretation and practical application of the definition of inputs for the purpose of credit utilization in operations subject to the incidence of the Social Integration Program (PIS) and the Contribution for the Financing of Social Security (COFINS), under the non-cumulative regime, in light of the understanding established by the Superior Court of Justice in the judgment of Special Appeal number 1.221.170.

2. Material and Methods

The study was conducted through documentary and jurisprudential research, focusing on the analysis of administrative and judicial rulings. Decisions issued within the scope of the Administrative Council of Tax Appeals (CARF) and the Superior Court of Justice (STJ) related to the definition of inputs for PIS and COFINS credit purposes were examined. The analysis included rulings prior to and after Special Appeal No. 1,221,170 (Theme 779), in order to observe the interpretive evolution of the criteria of essentiality or relevance of business expenses.

The data were collected from public jurisprudence databases of the respective bodies, using the keywords “concept of inputs for PIS and COFINS credit” and “essentiality or relevance”. The identified judgments were organized by interpretive line (restrictive or expansive) to verify divergences and convergences between administrative and judicial understandings.

Additionally, a literature review was conducted, examining specialized doctrinal works in tax law on the non-cumulative nature of social contributions, to provide theoretical support for the jurisprudential analysis.

Concrete case studies were also conducted, with a qualitative approach, analyzing two administrative tax proceedings submitted to the CARF. In these cases, the arguments of the taxpayer, the tax authority, and the adjudicating body were examined, as well as the economic effects of the disallowance of tax credits, evaluating the application of the concept of essentiality or relevance according to the CARF’s understandings.

3. Results and Discussion

The Brazilian legal system established the non-cumulative system for calculating contributions to the Social Integration Program (PIS) and the Social Security Financing Contribution (COFINS), allowing for credits on goods and services used as inputs, according to Laws No. 10.637/2002 and 10.833/2003. According to Sehn (2019), this regime was designed to rationalize the taxation on revenue, ensuring that the tax is levied only on the wealth effectively added.

Historically, the definition of “inputs” for credit purposes has been restricted by the tax authorities, generating administrative and judicial discussions. Even after the “pacification” of the topic by the Superior Court of Justice (STJ), the definition still presents subjectivity, requiring adherence to the criteria of essentiality or relevance for the taxpayer’s activity. This variability was illustrated in concrete cases at the Administrative Council of Tax Appeals (CARF), where the crediting of transfer freight between establishments was disallowed for the resale of finished products, as it did not fit the criteria of essentiality or relevance. In contrast, freight costs for the transport of chassis in the production process were recognized as inputs, as they are intrinsically linked to the manufacturing of the final product. The correct crediting of inputs, therefore, mitigates the cascading effect of social contributions, preserving fiscal neutrality.

Definition of inputs adopted by the tax authorities before the judgment of special appeal no. 1,221,170 – PR (general repercussion theme no. 779 of the STJ)

Before the consolidation of the STJ’s understanding in Theme 779, the tax authorities interpreted the definition of input restrictively, based on Normative Instructions SRF No. 247/2002 and No. 404/2004. This interpretation favored a material and physical criterion, influenced by the logic of IPI and ICMS, requiring physical integration or direct wear in the production process. Consequently, indirect expenses, administrative costs, support services, and logistical expenses were frequently excluded from credit, affecting companies whose value generation did not depend on the physical transformation of goods. Torres (2010) clarified that the Brazilian Federal Revenue Secretariat mistakenly extended the scope of the term ‘input’ provided for in IPI legislation to non-cumulative PIS and COFINS, generating an undue restriction in the appropriation of credits.

Definition of inputs within the scope of CARF before the judgment of special appeal no. 1.221.170 – PR (general repercussion theme no. 779 of the STJ)

In the period prior to the judgment of Theme 779, the CARF presented an interpretative oscillation. On one hand, a restrictive orientation was consolidated, approximating the concept of input to IPI legislation, requiring a direct and immediate relationship with the production process, physical contact, or direct consumption, as observed in Ruling No. 9303-006.107. On the other hand, a broader interpretative line was developed, which admitted a less physical and more functional reading of the term, recognizing services, fuels, and expenses directly related to economic activity, exemplified in Ruling No. 9303-005.625. This gradual evolution anticipated the subsequent jurisprudential consolidation of the STJ, moving from the necessity of physical contact to the analysis of the utility and relevance of the good or service.

Positions in the STJ before the pacification of the theme

Before the pacification by REsp No. 1,221,170, the STJ also presented distinct interpretative currents. A restrictive branch, as in REsp No. 1,429,759/SC, limited the credit to goods and services that were physically integrated into the final product or were directly consumed. In contrast, an expansive branch, manifested in REsp No. 1,246,317 MG, argued that the definition of input should not be reduced to physical criteria, but should consider economic and functional indispensability for the core activity. This interpretative line highlighted that the non-cumulative nature of IPI is focused on the product’s formation process, while that of PIS/COFINS is linked to billing or revenue, indicating that the scope of the word “input” is different in each context. The coexistence of these interpretations generated instability and the need for jurisprudential unification.

Consolidation of the theme in the judgment of special appeal no. 1,221,170 – PR (general repercussion theme no. 779 of the STJ)

The judgment of Special Appeal No. 1,221,170, which originated Topic 779, represented a milestone in tax jurisprudence, establishing interpretative guidelines and providing greater predictability. The Court set aside the automatic application of the IPI input definition, recognizing the inadequacy of mechanically transposing institutes of distinct natures. The consolidation was structured around two central criteria: the essentiality and relevance of the good or service in relation to the taxpayer’s economic activity. Minister Napoleão Nunes Maia Filho, in his leading opinion, and Minister Regina Helena Costa, in her opinion that served as the basis, defined essentiality as the intrinsic and fundamental dependence of the input, being an inseparable element of the production process or service execution, the lack of which would compromise quality, quantity, or sufficiency. Relevance was defined as the purpose that integrates the production process, either due to peculiarities of the production chain or by legal imposition (such as environmental costs or PPE). The criteria must be analyzed on a case-by-case basis, without establishing a regime of unrestricted crediting or equating inputs to any operational expense, preserving the role of infraconstitutional legislation.

Definition of inputs applied by CARF after STJ’s theme 779

The jurisprudential consolidation of Theme 779 impacted the business environment, leading to a reassessment of credit utilization policies. The Brazilian Federal Revenue Service (RFB) approved Normative Opinion COSIT No. 05/2018, which transcribed the STJ’s premises for the criteria of essentiality and relevance. Essentiality was characterized by the intrinsic and fundamental dependence of the item on the product or service, constituting a structural and inseparable element. Relevance was identified in the item whose purpose, although not indispensable, integrates the production process due to peculiarities of the production chain or legal imposition. However, the diversity of business activities still generates a risk of “bold” interpretations that exceed the understanding of the STJ and the tax authorities, potentially resulting in abuse of rights and credit disallowance. The study sought to deepen the understanding of the practical application of these criteria by taxpayers, RFB, and CARF.

Analysis of concrete cases within the scope of CARF

The broadening of the definition of inputs by the STJ brought opportunities for tax burden reduction, but the crediting must obey the criteria of essentiality or relevance, without extensive interpretations. The analysis of concrete cases in the CARF evidences the tension between the expansive interpretation of the STJ and the more restrictive application in the administrative sphere, especially for retail commercial activities.

Judgment within the scope of CARF unfavorable to the taxpayer: non-recognition of the nature of inputs for PIS and COFINS credit purposes

In administrative tax proceeding no. 16327.720183/2021-73, concerning a retail trade company, the CARF upheld the disallowance of PIS and COFINS credits. The disallowed items included advertising and promotion services, shopping center promotion funds, commissions to salespeople, credit card administration fees, condominium fees, uniforms, transfer freight between establishments, personnel, ICMS-ST, and DIFAL. The taxpayer argued that such expenses were essential and relevant, invoking the STJ’s “subtraction test” and the nature of its activity, which included marketing and the production of advertising content. The tax authority, based on Normative Opinion COSIT no. 05/2018, adopted a restrictive approach, distinguishing between production/service provision activities and mere resale activities, arguing that in retail, there are no inputs generating credits beyond goods for resale. The first-instance decision and CARF Acórdão no. 3201-012.534 confirmed the disallowances, conditioning the application of STJ criteria on the nature of the activity, not allowing an “expansion” to sales promotion expenses or commercial structure in predominantly retail companies. This outcome highlighted a partial dissociation between the theory of essentiality and administrative practice, maintaining litigation and legal uncertainty, and resulted in the application of a 75% ex officio fine on the principal amount.

Judgment within the scope of CARF favorable to the taxpayer: recognition of the nature of inputs for PIS and COFINS credit purposes

In contrast, in administrative proceeding no. 11020.721568/2014-50, involving a company from the industrial sector, the CARF recognized the nature of input for various expenses. The costs of freight for transporting chassis used in the production process were considered inputs, as they are intrinsically linked and essential to the productive activity. Similarly, expenses with transportation and treatment of industrial waste were credited based on the criterion of relevance, especially when arising from legal environmental impositions, being requirements for the continuity of business activity. Ancillary expenses linked to lease agreements, such as IPTU and condominium fees, were also admitted as part of the lease cost. The board partially granted the voluntary appeal, applying the STJ criteria more faithfully and recognizing the crediting of expenses that, although not physically incorporated into the final product, were indispensable or legally imposed for the achievement of business activity. However, the disallowance of credits without sufficient documentary proof of the link with the production process was maintained, reaffirming the burden of proof on the taxpayer.

The definition of inputs for PIS and COFINS crediting purposes remains a sensitive point in the Brazilian tax system, due to the absence of an objective legal definition and the reliance on jurisprudential and doctrinal construction. The consolidation promoted by the STJ in the judgment of Special Appeal No. 1,221,170 (Theme 779) represented a significant advance by establishing the criteria of essentiality or relevance, mitigating legal uncertainty. However, the establishment of these criteria did not completely eliminate interpretive divergences, especially in the administrative sphere, where the practical application of judicial precedent is conditioned by the peculiarities of the taxpayer’s economic activity. The analysis of CARF judgments shows that, although there is formal recognition of the STJ’s understanding, its incidence is modulated according to the nature of the business activity, especially concerning companies that resell finished products. The use of tax credits based on an “expanded” interpretation of the definition of inputs can generate significant financial repercussions, including disallowances and fines. The non-cumulative regime of PIS and COFINS, although an important instrument of fiscal neutrality, demands systematic interpretation and case-by-case application, guided by strict adherence to judicial precedents and current regulatory limits, and the correct use of tax credits depends on the relationship between the expenditure incurred and the economic activity actually performed, in light of the criteria of essentiality or relevance.

4. Conclusion

This study analyzed the interpretation and application of the definition of inputs for the purpose of tax credits for the Social Integration Program (PIS) and the Contribution for the Financing of Social Security (COFINS) under the non-cumulative regime, in light of the understanding established by the Superior Court of Justice in the judgment of Special Appeal No. 1,221,170 (Theme 779). It was found that the STJ set aside the automatic application of the IPI input definition, consolidating the criteria of essentiality or relevance as interpretive parameters. However, the analysis of the judgments of the Administrative Council of Tax Appeals (CARF) showed that, although there was formal recognition of the STJ precedent, its application was modulated according to the nature of the business activity, proving to be more restrictive for resale companies. Concrete cases illustrated that freight credits were treated differently, depending on the link between the expense and production or resale. This differentiated approach highlights the complexity in the practical application of the criteria, revealing a tension between the expansive interpretation of the STJ and the more restrictive application within the administrative sphere, especially for retail commercial activities. The main contribution of the study lies in elucidating this dynamic, offering a critical understanding of how the correct use of tax credits depends on the relationship between the expense and the economic activity, from the perspective of essentiality or relevance.

Despite the progress made by the STJ in mitigating legal uncertainty, the definition of inputs remains a sensitive point in the Brazilian tax system, given the absence of an objective legal definition and the persistence of interpretative divergences within the administrative sphere. This subjectivity and the modulation of the application of STJ criteria by the CARF, especially for resale companies, maintain a high degree of litigiousness and legal uncertainty. The use of credits based on “broad” interpretations can generate significant financial repercussions, including disallowances and fines. It is therefore recommended that companies’ fiscal management adopt a rigorous case-by-case analysis, guided by the observance of judicial precedents and current regulatory limits, to ensure the lawful use of credits. Future studies could further analyze the application of these criteria in other economic sectors or propose more objective evaluation models to mitigate interpretative divergences and strengthen legal certainty in PIS and COFINS crediting.

Bibliographic References

BRASIL. 2018. Receita Federal do Brasil. Parecer Normativo COSIT/RFB nº 5, de 17 de dezembro de 2018. Apresenta as principais repercussões no âmbito da Secretaria da Receita Federal do Brasil decorrentes da definição do conceito de insumos na legislação da Contribuição para o PIS/Pasep e da Cofins estabelecida pelo Superior Tribunal de Justiça no julgamento do Recurso Especial nº 1.221.170/PR. Diário Oficial da União, Brasília, 18 dez. 2018. Seção 1.

Machado, H. B. 2022. Crimes contra a ordem tributária. 5ª edição. Atlas, Barueri, São Paulo, SP, Brasil.

Pereira, C. M. da S. 2024. Instituições de Direito Civil. Vol. I. 35. ed. Forense, Rio de Janeiro, RJ, Brasil.

Sehn, S. 2019. PIS-COFINS: não cumulatividade e regimes de incidência. 2. ed. Noeses, São Paulo, SP, Brasil.

Torres, R. L. 2012. Planejamento tributário, elisão abusiva e evasão fiscal. Rio de Janeiro, RJ: Elsevier Editora Ltda., E-book. Disponível em: https://www.google.com.br/books/edition/Planejamento_Tribut%C3%A1rio/oJY4DwAAQBAJ. Acesso em: 13 ago. 2025.

Article originating from the Course Conclusion Work of the Specialization in Tax Management of the MBA USP/Esalq

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