Stussi Neves | Newsletter November 2022

I – Editorial

Dear friends and clients,

We trust that you are all well and in good health. As from January 2023, for 4 years, Brazil will have a new President. We hope that the progress achieved may continue at an increased rate. Brazil looks to be an excellent option for the new world order that has emerged as a result of the pandemic.

In this Newsletter we deal with various matters currently under discussion in the legal world. We talk about the battle of forms regarding general conditions of sale, tax settlements, reduction of IRRF (income tax withheld at source) and transfer prices.

Good reading! The Stüssi-Neves team is at your disposal for any clarification.

With kind regards,  


Gustavo Stüssi Neves


II – Articles


1. General Conditions for Sellers x General Conditions for Buyers – Battle of Forms

With the permanent need for swifter solutions for issues that commonly arise in the business world, companies developed standard clauses to regulate matters that are the subject of their commercial relations of buying and selling products and/or services. Thus, instead of discussing in each new business deal what will be the warranty period offered for a certain product, what are the rules in the event of non-payment of the price, what is the liability between the parties, what is the applicable law, etc., companies concluded that it would be much simpler if their commercial and legal conditions were previously defined, thereby saving time and money.

With this focus, it became common for companies to send their general conditions attached to proposals, quotes and invoices, so that such conditions were considered valid for that deal, without the need for discussion of the contract.

The fact is that if, on the one hand, the seller/supplier defined their sales conditions in a standardized manner, buyers also decided to simplify their lives and created their own standardized conditions for purchasing products and/or services.

Accordingly, it frequently happens that, in the same legal transaction, the seller attaches its “General Terms and Conditions of Sale” to its proposals and/or invoices, while the buyer attaches its “General Terms and Conditions of Purchase” to its orders.

It is at this moment that the doubt arises as to which should prevail: the General Terms and Conditions of the Seller or the General Terms and Conditions of the Buyer?

The so-called Battle of the Forms is the dispute between the Terms and Conditions (T&C) or standard clauses of different parties to the same commercial contract. This battle occurs in business-to-business (B2B) commercial relationships, especially in cases where both business partners present their respective T&C as being the rules applicable to that business relationship, and the T&C of each party have divergent and/or contradictory points with the T&C of the other party. And even if the T&C of one party establishes its prevalence over any other documents pertaining to that contractual relationship, the situation is complicated when the other party’s T&C also establishes its prevalence over other documents.

Currently, there exist several solutions to this Battle of Forms, which are determined mainly by the country where they will be applied. In the United States, for example, there is the UCC (Uniform Commercial Code), which provides its own rules for the solution of this battle. In addition, there are two solutions that are internationally considered the best for resolving the impasse. These are the “last-shot rule” and the “knock-out rule”.

The “last-shot rule” holds that the T&C that will prevail are those that were last sent to the other party, taking into consideration the chronological line of negotiations, and that were accepted by such other party (even if only tacitly).

Also according to this rule, as long as there are partial T&C acceptances, for example, with suggestions for modifications, we are still at the stage of counterproposals. Thus, the contract will only be formalized when there is acceptance, without any changes, of the last T&C sent by either of the parties.

The “knock-out rule” establishes that, in the case of divergent or contradictory rules between the T&C submitted, they end up “knocking each other out”, i.e. excluding each other. In such event, as a loophole arises, the excluded terms would be replaced by the provisions of the United Nations Convention on Contracts for the International Sale of Goods (CISG) or the applicable legislation.

And what is the situation regarding the battle of the forms in Brazil?

If there is a dispute in Brazil involving a company domiciled in Brazil and another domiciled abroad, there is no express provision regarding the battle of forms in Brazilian law, but the Civil Code contains a rule regarding the formation of contracts, stating that, once accepted, the proposal acquires the force of a contract, but if the acceptance of a proposal occurs after the deadline, or with additions, restrictions or modifications, this will be understood as a counterproposal (or new proposal).

So if, for example, a seller sends its T&C in a proposal and the buyer sends its own T&C on placing the order, there is a risk that the buyer’s T&C will take precedence, if the seller has not made any subsequent disclaimers.

With a view to avoiding the risk of divergent interpretations and legal uncertainty, the ideal solution is for the parties to seek, at the time of the preliminary negotiation of the business relationship, solutions for the application of their T&C, if they find that they conflict with each other. In this respect, the parties may, for example, make mutual concessions or negotiate specific conditions or contracts for that particular transaction, thereby facilitating the resolution of any future conflict.

Even though the T&C developed by companies aim precisely to avoid long and wearisome negotiations, the fact is that the existence of mutually contradictory T&C in the same transaction may lead to undesired conflicts. Accordingly, a dialogue conducted in good faith between the parties during the negotiations is essential to make it clear what each party expects from the other, clarifying possible controversial points and thus minimizing the risks of any disputes. 


Charles Wowk

Partner in the Civil Area – São Paulo


2.  New regulations for tax settlements

Tax settlement is defined as a type of agreement entered into between the parties to a tax obligation, namely, the government and the taxpayer, always by means of legal provisions, which, through mutual concessions, seek to extinguish the obligation.

The institution offers advantages to both the government and the taxpayer, since it reduces the high level of litigation involved in the collection of tax debts by the government, avoiding the congestion of the administrative tribunals and the judiciary, and enabling regularization of the taxpayer’s situation as debtor.

Although the tax settlement has been provided for in articles 156, II and 171 of the National Revenue Code since its creation in 1966, it was only in 2020 that it was regulated by Law no. 13.988/2020. On this occasion, although the requirements and conditions for a settlement with the Federal Government were defined, various doubts relating to its application arose, which resulted in the need for the publication of Law No. 14.375, on July 22, 2022, in order to clarify the rules.

The new law changed several provisions of the previous law with considerable advances. The discounts were increased (from 50% to 65%), as well as the period for payment of the debts (from 84 to 120 months). The negotiation of debts discussed at the administrative level is now allowed (previously only debts registered as overdue tax liabilities could be the subject of settlement), as well as the use of credits from tax losses and the CSLL negative calculation basis up to the defined limits. It is expressly provided that the amount of the reductions would not be subject to taxation, in addition to the fact that the lack of a guarantee would not invalidate the settlement or the possibility of settling balances from previous installment plans, among other changes favourable to taxpayers.

In order to regulate the new law and enable the use of the settlement in the federal sphere, the Attorney General of the National Treasury issued PGFN Ordinance no. 6757, of July 29, 2022. Subsequently, the Brazilian Federal Revenue Service issued Ordinance no. 208 of August 11, 2022. Both regulations now establish the conditions for the settlement to take place.

In accordance with PGFN Ordinance no. 6757/2022, the following are the types of settlement on the collection of overdue federal tax and FGTS liability: I – settlement through adhesion to the proposal of the Attorney General of the National Treasury (by notice to the public stipulating the deadline for adhesion, the criteria for eligibility of the debts and conditions preventing adhesion, the commitments and obligations required, cases of exclusion, etc.); II – individual settlement proposed by the Attorney General of the National Treasury (debtors whose consolidated liabilities registered as overdue exceed R$ 10 million (FGTS liabilities in excess of R$ 1 million),  debtors that are bankrupt, under judicial or extrajudicial reorganization or liquidation, or under extrajudicial intervention; also public entities; and debtors whose consolidated liabilities registered as overdue exceed R$ 1 million (FGTS R$ 100.000,00) and that are suspended by court order or guaranteed; and III – individual settlement proposed by the debtor with registered overdue federal tax or FGTS liability, including the simplified form (through REGULARIZE).

Moreover, the Federal Revenue Service of Brazil (RFB), through Ordinance no. 208/22, now provides for the following types of tax settlement in administrative fiscal litigation: I – settlement by adherence to the RFB proposal (in accordance with rules announced by notice to the public); II – individual transaction proposed by the RFB (debtors whose debts subject to administrative tax litigation exceed R$ 10 million, debtors who are bankrupt, under judicial or extrajudicial reorganization or liquidation, or under extrajudicial intervention; in addition to public entities); and III – individual transaction proposed by the taxpayer (effected solely through the opening of a digital process in e-CAC, including the simplified form).

In the year 2022, three different notices were published with a proposal of settlement by adhesion: notice no. 09/2022 providing for settlement by adhesion in tax litigation of an important and widespread legal dispute involving debts arising from the tax amortization of the premium under the legal regime prior to Law no. 12. 973/14; notice no. 01/2022 providing for settlement of tax claims constituted on the initiative of the tax authority and considered irrecoverable, administered by the RFB; and notice no. 02/2022 providing for the settlement by adhesion of small-value debts in tax administrative litigation (60 minimum wages on the date of adhesion, including principal and administrative fine), related to taxes administered by the RFB.

Despite the regulation, certain aspects are still pending definition, such as the method of calculating the amounts for the individual settlement proposed by the PGFN and RFB; in this case, whether all debts should be totaled or whether partial adhesion is allowed; the need or otherwise for the use of taxpayers’ credits pending refund/offset for the settlement; possible limits on the use of tax losses and negative tax base; among others.

The new PGFN Ordinance no. 8798 has recently been published in the Official Gazette of October 7, 2022, instituting the Program for Early Payment of Settlements and Registration of Overdue Federal Tax Liabilities with the Attorney General of the National Treasury – “QuitaPGFN“. The Ordinance provides special conditions for payment of balances on certain settlements (entered into up to October 31, 2022) and on debts registered as overdue liabilities up to October 7, 2022 (not yet settled), which are considered irrecoverable or difficult to recover, with the possibility of discounts.

In such case, taxpayers who have already settled their debts may use the “QuitaPGFN” to take advantage of balances of IRPJ tax losses and negative CSLL calculation base and possibly obtain a greater reduction of the debts.

On adhering to the “QuitaPGFN” programme, it is necessary to pay at least 30% of the outstanding balance in cash. The remainder of the settled debt may be paid using IRPJ tax losses and the CSL negative tax base ascertained up to December 31, 2021. Adhesion must be done through the PGFN website (“Regularize”) between November 1, 2022, and December 30, 2022.

Considering the various existing methods of tax settlement, the choice must be based on an adequate analysis of the legislation, on the company’s economic situation and on the feasibility of gathering the documentation and information required for each method. A careful analysis allows the best available benefit to be obtained for settlement of the tax debts and maintenance of fiscal regularity.


Patrícia Giacomin Pádua

Partner in the Tax Area – São Paulo


3.    Reduction of IRRF on payments for personal expenses abroad 

On September 22, Provisional Measure (MP) no. 1.138 of 2022 was published, which, by amending Law No. 12. 249/2010, reestablished the reduced rate for Income Tax Withheld at Source (IRRF) levied on amounts paid, credited, delivered, used or remitted to an individual or legal entity resident or domiciled abroad, for the purpose of covering personal expenses abroad of Brazilian residents, while on a tourist, business, service or training trip or on an official mission, up to the limit of R$ 20.000,00 (twenty thousand reais).

In accordance with Interministerial Explanatory Statement (EMI) no. 333, of September 16, 2022, from the Ministries of Economy and Tourism, which accompanies the MP, the rate, which was already 6% (six per cent) and was increased to 25% (twenty five per cent) as of 2020, will comply with the following schedule:

– 6% (six per cent), from January 1, 2023 to December 31, 2024;

– 7% (seven per cent), from January 1 to December 31, 2025;

– 8% (eight per cent), from January 1 to December 31, 2026; and

– 9% (nine per cent), from January 1 to December 31, 2027.

The measure aims to mitigate the losses caused to the tourism sector by the Covid-19 pandemic and to make domestic agencies and operators more competitive.


Arthur T. Stüssi Neves

Partner in the Tax Area – Rio de Janeiro


4.    Transfer pricing: Illegality of the methodology introduced by IN 243/02

On October 4 of this year, the first Panel of the Superior Court of Justice (STJ) concluded its judgment in AREsp 511.736/SP, in which it ruled that the transfer pricing methodology (Resale Price less Profit – PRL-60) imposed by SRF Normative Instruction 243/02 is illegal.

In the view of the STJ, the rules contained in art. 12 of SRF Normative Instruction 243/02, by establishing a different calculation, exceeded the limits contained in art. 18 of Law 9.430/96, which resulted in a considerable increase in the burden on taxpayers.

The discussion is of special relevance to multinational companies that import raw materials for the purpose of industrialization processes in Brazil, as they had been repeatedly defeated in the Administrative Tax Appeals Council (CARF), which, through Precedent 115 – diametrically contrary to the decision handed down by the STJ – had recognized the legality of the PRL-60 calculation system contained in IN 243/02.

The rule, published in 2002, remained in force until 2012, supporting several assessments still under discussion to this day, and may result in significant changes in the prognosis of disputes in the judicial sphere from now on.

Although this is not a judgment of a repetitive appeal, this decision is the first on the matter in the STJ and was handed down just as the country is working to adapt its Transfer Pricing rules to the international model adopted by the Organization for Economic Cooperation and Development (OECD).


Arthur T. Stüssi Neves

Partner in the Tax Area – Rio de Janeiro