The Municipality of São Paulo sponsors a restrictive view on the ISS exemption in the exportation of services – Leal Cotrim Jansen Advogados

Leal Cotrim Jansen Advogados

News

The Municipality of São Paulo sponsors a restrictive view on the ISS exemption in the exportation of services

The Federal Constitution, in art. 156, § 3º, item II, provides that ISS does not levy over exportation of services.

The Complementary Law 116/2003, which provides on ISS, sets forth that ISS does not levy on exportation of services, in a manner consistent with the Federal Constitution.

However, in its art. 2, sole paragraph, the above-mentioned complementary law sets forth as an exception to the general rule that ISS does not levy over exportation of services, the cases where, cumulatively, (i) the services are provided in Brazil; and (ii) the results of services provided occur in Brazil, irrespective of whether payment is made by an entity abroad.

The laws of the Municipality of São Paulo (art 2 of Law 13,701/2003) provide that the ISS is not levied on exportation of services out of the country, unless the results of the services occur in Brazil.

As one may note, a crucial issue for the identification of whether ISS shall levy is the definition of results, which definition is a requisite for the determination of where they actually occurred.

Recently, the Municipality of São Paulo, in its Normative Opinion SF 02, as of 26 April 2016, brought a new definition for results, which led to a stricter view on what circumstances services qualify as exportation of services and, therefore, shall not be subject to services tax (ISS).

Indeed, pursuant to said normative opinion, which interpreted art. 2 of Law 13,701/2002, result is the performance of the service itself, independently of where corresponding benefits are verified. Verbis:

“Art. 1. For the purpose of the provisions of the sole paragraph of Article 2 of Law 13,701, as of 24 December 2003, “result” is deemed to be the actual performance of the activity described in the list of services of article 1 of Law 13,701, as of 24December 2003, being it irrelevant that possible benefits or consequences arising from such activity are enjoyed or verified abroad or by a person residing abroad.

§1. The result occurs here when the activity described in the List of Services is carried out in Brazil.

§2. Neither the mere delivery of the product of services, such as reports or communications, nor isolated procedures performed abroad that do not constitute an effective provision of services in foreign territory qualify as exportation of services.

§3. In case of long term continued services, the provision of services will be considered proportionately performed to the fulfilment of their monthly milestones.

Art. 2. This Normative Opinion, that bears an interpretative character, revokes all provisions in contrary to it, especially Consultation Opinions issued prior to the date of publication of this act, regardless of the communication to consultants.”

The understanding of the Municipality of São Paulo tax authorities is clearly restrictive if compared to the decisions issued by the State of São Paulo Court of Appeal on the matter, which sponsors the understanding that if the result of the services occurs overseas, the ISS will not be due (e.g., Appeal 10128372320148260053, Reporting Judge Monica Serrano, judged on 26 February 2015, by the 14th Public Law Chamber, published on 19 March 2015).

The interpretative rule issued by the Municipality of São Paulo, which legality is questionable, increases the risk of tax assessments to companies established in São Paulo and, perhaps, other municipalities may opt to follow a similar interpretation.

Privacy Policy

Leal Cotrim Jansen Advogados (“Leal Cotrim”) is firmly committed to respecting the privacy of its members, clients and all individuals whose personal data we collect, store or process in any other way. Any information relating to an identified or identifiable natural person is personal data.

This Privacy Policy guides the processing of personal data by Leal Cotrim and disciplines the exercise of the rights of the individuals whose personal data are processed by Leal Cotrim and/or on behalf of Leal Cotrim. We kindly ask that you read it carefully before providing us with your personal data and every time you wish to know how we use your personal data.

1. How we process your personal data

All processing operations carried out by Leal Cotrim are compliant with the applicable laws, especially Law 13,709/2018 (“Lei Geral de Proteção de Dados”) and Law 8,906/1994 (“Estatuto da Advocacia”).

We only processes your personal data under the following legal basis:

(i) under your consent;
(ii) for compliance with a legal or regulatory obligation;
(iii) for the performance of a contract for the provision of legal services or in order to take related steps prior to entering in such a contract;
(iv) for the regular exercise of rights within a judicial lawsuit, na administrative or arbitral procedure; and
(v) for the purposes of the legitimate interests pursued by Leal Cotrim, except where such interests are overridden by your fundamental rights and freedoms which require protection of your personal data.

Visiting and browsing our website are anonymous. Regarding the use of our website, we only collect the personal data that are provided by you when you use the contact tool available on our website, under your explicit consent.

For your privacy to be preserved, if you forward you personal data to Leal Cotrim in order to be considered for one of our vacancies, they will be securely erased immediately after the recruitment process ends.

In any case, Leal Cotrim only processes the personal data that are necessary to achieve the purpose of the processing, and for the period that is necessary to do so.

2. How we protect you personal data

Leal Cotrim adopts technical and administrative measures to protect your personal data from unauthorized access and from non-intentional or unlawful destruction, loss, modification, communication and dissemination. However, any security incident involving your personal data that may cause you significant risk or harm will be communicated to you and to the National Data Protection Authority – ANPD within a reasonable time.

3. Your rights as data subject

As a data subject, you have the following rights, subject to the provisions of article 7, II, of Law 8,906/94 and article 7, VI, of Law 13,709/2018:

(i) confirmation as to whether your personal data are being processed;
(ii) access to your personal data;
(iii) rectification of your personal data that are incomplete, inaccurate or outdated;
(iv) anonymisation, restriction of processing, or erasure of your personal data that are unnecessary, excessive, or processed in non-compliance with the provisions of the applicable law;
(v) portability of your personal data for the use of another services provider, in accordance with the regulations issued by the National Data Protection Authority – ANPD, subject to the protection of commercial and industrial secrets;
(vi) erasure of your personal data, except in the cases provided for in the applicable law;
(vii) information about public and private entities with which we share your personal data;
(viii) information about the possibility of not providing your consent for the processing of personal data and about the consequences of the refusal;
(ix) withdrawal of your consent, subject to the public interest that may justify the processing to continue or the existence of another legal basis that authorizes it; and
(x) opposition to any processing of personal data based on one of the legal basis that do not require consent, provided that there has been a breach of the applicable law, and subject to the public interest that may justify the processing to continue.

4. How you can exercise your rights

At any time, you can exercise your rights as a data subject by sending a request to encarregado@lealcotrim.com.br. Following confirmation of your identity, your request shall be answered within the legal term or, in the absence of a legal term, within a reasonable period.

If you receive our institutional newsletters and no longer wish to receive them, you can also unsubscribe through the link that we provide in every newsletter.

5. Changes to this privacy policy

This Privacy policy was drafted in accordance with the current laws and may be modified to better suit the applicable laws and regulations. Any changes to this Privacy Policy will be effective as of the date indicated below.

01 December 2020