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Date: February 10, 2020
Posted by: CPDMA Team

Cases in Carf can generate loss of R$ 440 million for CVC

Administrative court discusses the tourism agency's business model and leaves the sector in the spotlight.

Last week, the tourism market observed the defeat of the company CVC in the Administrative Council of Tax Appeals (Carf) in a case of R$ 127.6 million, to be added to a fine and interest. The company said in a document sent to the Securities and Exchange Commission (CVM) that the chance of defeat was “remote”, according to an assessment by Pinheiro Neto Advogados. The decision was rendered on January 21.

Carf understood that CVC performs the function of tourism agency and, therefore, PIS/Cofins is levied on the revenue transferred as a form of commission to tourist service providers and store chains. To try to rid the company of the millionaire charge, lawyers claim that the company is only an intermediary, through the website and stores, between tourists and airlines and hotels.

Law firms that work at Carf put the process as one of the most important that week. The analysis is that the case has a great impact on the tourism sector, as it creates an unfavorable precedent for the market and with direct consequences on the accounts of travel agencies.

The trial of the case began in December 2019, but was postponed to 2020 after a request for a review by counselor Andrada Márcio Canuto Natal, representative of the Tax Authorities. There are other CVC cases involving the same theme that will still be judged at Carf. However, the assessment of counselors and tax experts is that the chances of reversing the understanding within the administrative court are minimal. The solution for a possible reversal of the decision must be sought in the Judiciary.

There are three more cases in Carf on the same topic. Maintaining the position of the last judgment, the loss for CVC could reach R$ 440 million, plus interest and fine. One of the cases is in the process of being discussed in judgment in the Superior Chamber of Carf, the last instance of the administrative court, after the defeat of CVC in the first degree of appeal of Carf. Another case, R$ 151 million, was won by CVC and is awaiting an appeal from the National Treasury. The last case will still be judged in the ordinary classes of the court, an instance before the Superior Chamber.

With the recent judgments unfavorable to the CVC in the ordinary class, the tendency is for all processes to be taken to the Superior Chamber through appeal. With the low chances of victory, the assessment is that the issue will have to be judicialized.

The ordinary classes represent a greater chance of victory on the part of the CVC, as there is greater balance in the decisions of the tax advisors and the taxpayers. Even so, the company, so far, has not achieved a favorable result.

In the Superior Chamber, the chances of winning are remote, in the assessment of tax experts and counselors. That's because the president of the class, always representing the tax authorities, has the vote of minerva that can unbalance the final result. In addition, there is greater pressure and monitoring for tax advisors to maintain a position in favor of tax collection.

With this, JOTA found that the trend is for CVC to defeat in all cases in Carf. Subsequently, these cases must be prosecuted. Even if the CVC wins a case in the ordinary groups, the National Treasury can appeal to the Superior Chamber, where there is practically no chance of victory for the taxpayer. All cases that reach the Superior Chamber will be judged by the 3rd Panel.

CVC's Hope is the Judiciary

While the scenario at Carf is not the best for CVC, the Judiciary may represent hope for the company. There are several decisions on various topics in Justice that change the understanding applied by Carf. In the assessment of tax experts, there is room for discussion in the Judiciary to try to reverse the outcome of the CVC case.

This is because the assessment is that Carf did not take into account technological aspects of CVC's performance. The company is based on its website, where customers are connected to other service providers, such as hotels and airlines. It would be a business model similar to that of Airbnb and Booking.com, in which the company only acts as an intermediary between customers for hotel pages and those interested in renting apartments.

In the view of lawyers, Carf's decision is “absurd” because it does not take into account technology as a form of intermediation. The Judiciary, on the other hand, does not suffer the same pressure for the vote to be in favor of the Federal Revenue Service. This can help the CVC so that the result is reversed.

Sought more than once, CVC did not return contact details for the report.

Source: Alexandre Leoratti via Jota.

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