Bloomberg Law for HR Professionals is a complete, one-stop resource, continuously updated, providing HR professionals with fast answers to a wide range of domestic and international human resources...
Feb. 24—Despite a high court ruling against social security taxes on employee vacation bonuses, Brazil's tax department says it will continue to assess the levy on employers.
Mandatory vacation bonuses amount to an additional payment of one-third of an employee's monthly salary. In March 2014, Brazil's superior court of justice, the country's second highest appeals court, ruled that companies do not have to pay social security taxes on payments to employees for these bonuses, an exemption government officials estimated at the time would reduce social security tax collections by $2.4 billion a year.
In response to a taxpayer query, however, the tax department released a statement Jan. 16 saying that it would continue to tax vacation bonuses because the superior court failed to address the provisions of a 2002 law permitting this taxation. The tax department said that it would continue to tax companies for their vacation bonus payments pending a ruling from the supreme court where several cases are now under consideration.
Corporate attorneys reacted angrily to the department's position.
“It is amazing how the tax department can insist on charging social security taxes on these payments,” Rodrigo Rigo Pinheiro of law firm BCBO Attorneys said, adding that the supreme court has already ruled that “only payments incorporated into a worker's salary are subject to social security taxation.”
According to Fabio Medeiros of law firm Machado Associates, several companies are already preparing suits to eliminate the vacation bonus taxation and to recover past payments based on the superior court's ruling.
To contact the reporter on this story: Ed Taylor in Rio de Janeiro at firstname.lastname@example.org
To contact the editor responsible for this story: Rick Vollmar at email@example.com
For more information on Brazilian HR law and regulation, see the Brazil primer.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)