The Third Panel of the Higher Chamber of Tax Appeals (CARF), by casting vote, understood that the delay in paying up the share capital in the Advance for Future Capital Increase operations - AFAC does not characterize the operation as a loan and, therefore, removes the incidence of IOF.

AFAC is an operation that allows companies to receive resources from partners or shareholders in order to increase the capital of the business. In practice, it is a type of internal loan that can be converted into shares or greater participation in the institution's quotas.

In the operation examined by the CARF, the taxpayer entered into a contract for the advance of financial resources that would be destined for the future capital increase on a date to be agreed by the parties, which took place two years after the advance.

The issue revolved around the necessary time that the taxpayer should have carried out the capital increase, which, according to the understanding until then, was a maximum of 120 (one hundred and twenty) days. According to the inspection, the lapse of two years between the availability of funds and the effective increase in capital stock, without any justification, characterizes the operation as a mutual, attracting the levy of IOF under the terms of art. 13 of Law No. 9. 779/99.

The Reporting Councilor, whose vote was defeated, argued that, although there is no deadline for paying up the capital stock, the inspection could not remain inactive waiting for an indefinite period until the capital stock is paid up. In this way, the Counselor accepted the arguments of the National Treasury to de-characterize the AFAC transaction and recognize that it is a loan transaction, a triggering event for IOF.

However, Councilor Tatiana Midori Migiyama opened a divergence and, under the terms of her vote, established that there is no express legal limit for capital increase, since Normative Opinion CST 17/84 and IN SRF 127/88, which provided for the payment term of 120 (one hundred and twenty) days, were revoked. Thus, even if two years have elapsed between the advance and the payment, the operation cannot be characterized as mutual and, therefore, the possibility of levying IOF is absent.

Based on this decision, there is a change in CARF's position on the issue, this because, in Decision No. 3301-002. 282, presented by the National Treasury Attorney's Office as a paradigm of the divergence established, the Council understood that the AFAC would be uncharacterized by the lack of payment of the advance at the first opportunity, recognizing the incidence of IOF.

It is important to note that for a contribution of resources to be effectively considered as AFAC, it is necessary that its purpose is clearly, obligatorily and irrevocably the increase of the capital stock, regardless of the term in which this payment takes place.

Therefore, the decision is prestigious for removing the IOF levy on AFAC operations even when a time lapse between the advance and payment of capital has elapsed, interpreting in the best way the current legislation and stimulating an important instrument for financing business activities.

By Bruna Nunes de Quadros

CPDMA Team - Tax