The Supreme Court concluded, on June 12, the trial of motion for clarification filed in the extraordinary appeal 400,479 (RE 400,479), whose objective was to define the scope of the concept of billing for companies in the insurance sector in the period prior to the beginning of the validity of Law 12,973/14 (January 1, 2015).

Companies operating in the insurance sector are subject to the calculation of PIS and Cofins in the cumulative regime, pursuant to article 8, item I, of Law 10,637/02 and article 10, item I, of Law 10,833/03, respectively.

Until the enactment of Law 12,973/14, Article 2 of Law 9,718/98 established that the basis of calculation of PIS and Cofins was the invoicing of the legal entity.

In the trial of extraordinary appeals 346,084, 358,273, 357,950 and 390,840, the Supreme Court decided that the concept of billing, until Constitutional Amendment 20/1998 (which authorized the institution of contribution on gross revenue), included revenues from the sale of goods, rendering services or a combination of both.

Based on the premise established in the trial of these extraordinary appeals, concluded in 2005, there remained doubt about the scope of the concept of billing for companies in the insurance sector, since they do not sale goods nor provide services.

In the trial of RE 400.479,[1] the STF clarified that companies in the insurance sector, although their activity does not include the sale of goods or rendering services, should submit their typical business revenues to taxation to PIS and  Cofins.

The prevailing position, led by the retired minister Cezar Peluso, emphasizes that the expression billing should be interpreted in the sense of understanding the revenues from "the set of businesses or operations developed by these companies in the performance of their typical economic activities."

He concludes: "the proposal that I submit to the Court is, therefore, to recognize that one should tax, only, and in a precise way, what each company earns by reason of the exercise of the activities that are its own and typical, while giving it purpose and reason for being."

It is inferred, therefore, that, although the premiums received by insurance companies are not characterized as a price for the acquisition of a good or rendering service, such amounts are included in the amount of revenues earned by the companies in this segment (operating revenues) and, consequently, are subject to taxation by PIS and Cofins.

On the other hand, any other revenues earned by insurance companies that are not related to their typical activity will not be taxed by PIS and Cofins.

In this case, revenues expressly excluded from the calculation basis must also be considered, in accordance with article 3, paragraph 6, item II, of Law 9,718/98 (indemnities corresponding to claims incurred and actually paid, less amounts received as coinsurance, reinsurance, salvaged and other reimbursements).

These legal provisions that provide for hypotheses of exclusion from the basis of calculation were not the subject of discussion in this case.

In our view, from the premise signed by Minister Cezar Peluso, it is possible to interpret that the revenues from the financial investments of the amounts destined to the constitution of technical reserves would not be subject to taxation by PIS and Cofins, mainly because such income would not be derived from the typical activities of companies in the insurance sector. However, it is important to note that this specific point was not expressly addressed by the winning vote, which is why we cannot rule out interpretation to the contrary.

In the vote-view delivered by Minister Dias Toffoli, the issue of financial revenues from the application of the values of technical reserves was expressly addressed and it was pointed out that its constitution is a legal imposition, as a condition for the exercise of business activity. For this reason, the revenues earned from these financial investments would not fall under the concept of billing, ruling out the incidence of PIS and Cofins.

Minister Luís Roberto Barroso followed Minister Dias Toffoli on this point as well. Minister Edson Fachin, on the other hand, differed in the part of the financial revenues from the application of technical reserves, because he understood that this topic was not raised in the lower courts.

There is the possibility of filing an appeal precisely for clarification on this specific point.

Therefore, for the period prior to the beginning of the validity of Law 12,973/14 (that is, until December 31, 2014), the Supreme Court defined that, for insurance companies, the values of premiums make up the concept of billing and must be included in the calculation basis of PIS and Cofins.


[1] We point out that our comments are based on the draft votes made available, which should be confirmed after the publication of the judgment, as they may undergo some change.