Change in STJ`s position on the calculation basis of ISSQN on engeneering services
(Paulo Antônio Machado da Silva Filho)
The Superior Tribunal of Justice has recently changed a consolidated positioning with respect to the deduction of the calculation basis of the ISSQN (tax on services of any kind), coming back to its old positioning.
The superior court has, until now, decided about the impossibility to exclude from the calculation basis of the tax on services amounts related to sub-contract works. This positioning was based on the argument that the calculation basis of the tax on the performance of services of engineering work would be the total cost of the service, without the possibility to deduct amounts corresponding to materials used and sub-contract works (“Recurso Especial” 662.385/MG).
However, the Supreme Court (“Superior Tribunal Federal”), recognizing the general repercussion of this issue, has manifested its agreement to deduct from the ISSQN calculation basis materials employed in the civil construction. In a decision on this very issue, Ministry Carlos Ayres Britto affirmed that the Supreme Court jurisprudence is clear in the sense that art. 9 of Law-Decree 406/1968 was integrated in the 1988 Federal Constitution, and that therefore it is possible to deduct from the calculation basis of ISS the amounts of the materials used in the civil construction and the amounts of the sub-contract works.
The First Chamber of the Superior Tribunal of Justice, following the positioning of the Supreme Court, changed its positioning consolidated for years declaring possible the mentioned deduction, by a decision in the procedure of “Agravo Regimental” in the Interlocutory Appeal 1.410.608-RS. The new understanding, for the same reasons, is expected to be followed by the Second Chamber.
The deduction in question applies not only for amounts related to sub-contract works but also to amounts of materials used in the rendering of the service and has as legal basis article 9 of Law-Decree nº 406/68, integrated, by the 1988 Federal Constitution, as Complementary Law in material sense (according to the understanding expressed by the Supreme Court).
For those that collect a surplus of tax, it is possible to recover the amount unduly paid by means of a law suit. In case your company finds itself in this situation, our Tax Law team can give you all the assistance to recover your credit.