Brazil’s Federal Supreme Court restarts analysis on imposition of ICMS on transfers between branches of same legal entity

• Based on a recent Brazilian Federal Supreme Court ruling, transfers between branches of the same legal entity do not trigger the ICMS, which is a State Value Added Tax (VAT). The ICMS taxable event depends on the transfer of ownership of the good (sale).
• The Brazilian Federal Supreme Court has been, over the years, recognizing transfers do not trigger the ICMS. However, the previous rulings issued essentially did not have binding effect.
• Those discussions were initiated by taxpayers that, for particular reasons, such as a tax benefit, could not use the ICMS credits generated in the transfers (because the incentive provides for the reversal of such credits).

Source EY

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