Taxation Applicable to Interest on Net Equity Capital by Holding Companies Taxed by Presumed Profit Taxation Regime

Abstract

The present article aims to analyze the tax treatment applicable to interest on net equity by holding companies taxed on the presumed profit taxation regime. As will be seen throughout the article, the controversy lies in the fact that, while holding companies have the main objective of managing equity interests, so that dividends and interest on equity would be considered “gross revenue” for the purposes of IRPJ and CSLL taxation under the presumed profit regime, pursuant to article 12 of Decree-Law No. 1,598/1977, which is why they would be subject to the application of the presumption percentages established by law (cf. article 25, item I, of Law No. 9,430/1996), tax legislation expressly provides that Interest on Equity (JCP) is considered “other income” and must be taxed without the application of the presumption percentages (article 51 of Law No. 9,430/1996). After presenting the position of the Federal Revenue Service for IRPJ and CSLL purposes, recently expressed through Normative Rulling No. 148/2023, this article, based on distinct foundations, concludes that the correct legal interpretation, after Law No. 12,973/2014, should be that Interest on Equity (JCP) is considered “gross revenue”, attracting the application of the presumption percentages established by law.