Goodwill Controversies before Law No. 12,973/2014

Tax Amortization of Internal Goodwill and Allocation of the Residual Value of the Stake Aquisition to the Goodwill Due to Expected Future Profitability

Abstract

The accounting changes introduced by Law No. 11,638/2007, as well as the rules issued by regulatory bodies aiming to align Brazilian accounting with international standards, resulted in a gap between the tax and accounting rules regarding the goodwill due to expected future profitability – which was partially reversed with the publication of Law No. 12,973/2014. Until then, although there was no express prohibition on the tax amortization of internal goodwill, the goodwill generated within an economic group was only deductible from the income tax base when the operation that gave rise to it had economic substance. With regard to the allocation of the residual value of the stake acquisition to the goodwill due to expected future profitability, the lack of legal provisions on the subject prevents taxpayers from being compelled to undertake such procedure.