Decisive week as Supreme court passes judgement on Social Security Taxation in Agribusiness

The Federal Supreme Court (STF) is in the process of judging four disputes that will define:

• the constitutionality of the Rural Worker Assistance Fund (“FUNRURAL”) for:
  • individual rural producers
  • for legal entity rural producers
  • for agribusiness.
• as well as the validity of subrogation by the end purchaser regarding FURURAL; e
• in addition to the constitutionality of the National Rural Learning Service (“SENAR”)

Judgments will be passed in a virtual session, between December 09 and 16, 2022.

In RE 700.922 (Subject 651), under discussion:

• is the constitutionality of FUNRURAL levied on the gross revenue of the legal entity rural employer, resulting from sales of its production.
• and the constitutionality of the contribution to SENAR, of 0.25% of the gross revenue from the sale of own-produced goods, pursuant to article 25, items I and II, and paragraph 1, of Law 8.870/94.

This is an appeal by the State against a decision by the Federal Regional Court of the 4^th Region (“TRF4”), which understood that the referred contribution constitutes a case of double taxation, since it would be levied on the same taxable event on which the Contribution for the Financing of Social Security (“COFINS”) is levied.

The TRF4 also understood that it would be impossible to distinguish between the gross revenue from sales of rural production, that is, a taxable event provided for in Law 8.870/94, and billing, calculation base and taxable events generated by COFINS

It also established that such taxation would be a case of establishing a new source of funding for social security, which could only be done by means of a complementary law

The judgment has 4 votes to 2 in favor of granting the extraordinary appeal of the State, establishing the validity and constitutionality of the contribution by the rural employer as a legal entity to FUNRURAL and SENAR.

In RE 611,601 (Subject 281), the discussion surrounds the social security contribution due by agroindustries, instituted as a source of funding for social security through Law 10,256/2001, and which argues that such contribution could only occur by complementary law

This dispute argues for an annulment of the debit notice, whereby the social security contribution that is levied on the payroll should instead be levied on the gross revenue

Topic 281 also discusses the impossibility of FUNRURAL being levied on the same economic base as the contributions due under PIS and COFINS (billing or income), under penalty of being charged twice, as well as the unconstitutionality of subrogation

In short, the resulting decision will define the validity of FUNRURAL (instituted by Law 10.256/2001) being required on gross revenue from sales of production, in place of on the payroll, for agroindustries

So far, the votes are 2 to 1, in favor of the constitutionality of the contribution charge.

In RE 816,830 (Subject 801), the constitutionality of charging 0.2% on gross revenue of individual rural producers, in place of taxation on the payroll as a contribution to SENAR, is discussed

The individual rural producer claims in his appeal that there is no way to confuse the contribution to SENAR with the employer social contribution paid by the rural producer, as they constitute contributions of different natures, with different destinations. The violation or not of the principle of isonomy in the incidence of the contribution to SENAR on the gross revenue from sales of rural production is under analysis. So far, voting is 3 to 0 in favor of the constitutionality of the contribution charged.

In ADI 4,395, the constitutionality of both FUNRURAL of the individual rural employer and subrogation by the end purchaser of rural production is discussed. Under analysis is the validity of FUNRURAL in light of Law 10.256/01 (recognized in RE 718.874), and also discusses the status of subrogation

Justice Tofolli’s tie-breaking vote upheld the direct action to grant interpretation in accordance with the federal constitution, art. 30, IV, of Law No. 8,212/91, in order to overrule the interpretation that authorizes, in the absence of a new law providing for the subject, the application to establish subrogation from the rural employer’s contribution on gross revenue from sales of its production (art. 25, I and II, of Law No. 8,212/91) collected under the terms of Law No. 10,256/01 or subsequent laws

That is, despite maintaining the contribution to SENAR, the resulting judgement removed subrogation by the end purchaser of rural production as regards FUNRURAL. However, as the judgment has 4 votes cast, it would be prudent to wait for the publication of the judgment to assess the final arguments.

Demarest’s Social Security and Tax teams are available for further information or clarifications.