Judiciary Branch has been issuing favorable injunctions to the taxpayers, excluding the additional penalty of 10% (General Social Contribution) over Employee Severance Indemnity Fund – FGTS paid in case of dismissals without cause.
Currently, to dismiss without cause, besides FGTS’ penalty of 40% destined to the employee, the companies must pay this additional penalty of 10%, which is passed on to the Government.
The General Social Contribution was stated to adjust distortions that were resulted from Brazilian economic plans known in Portuguese as “Plano Verão” and “Plano Collor” (monetary adjustment of FGTS’s accounts due to understated inflation). However, those distortions no longer exists since 2007 and – considering the absence of the purpose to which this additional penalty was created – the amounts collected had their destination totally distorted.
There are two Direct Unconstitutionality Actions – ADINs in progress before Brazilian Federal Superior Court – STF to issue a final decision about this matter.
In the meantime, the taxpayers can file a suit to avoid the payment of the 10% penalty, as well as to recognize the right of tax refund or even of tax offsetting regarding the amounts collected in the past 5 years, counting from the lawsuit filing.
Tax Team at Pacheco Neto Sanden Teisseire Law Firm.
