Publications

Category: Succession planning

The intersection of several areas of law to ensure well-structured and legally secure estate and succession planning is not new. For instance, the fiscal analysis, one of the most relevant pillars of this work. With the recent approval of the Tax Reform by the Chamber of Deputies, it is expected a direct impact of such changes in the structuring of estate and succession planning.

We list below the most relevant topics of Tax Reform in these cases.

• PROGRESSIVE TAXATION OF ITCMD/ITD/ITCD

The ITCMD, ITCD or ITD, is the tax levied on the transmission of assets and rights as a result of death (inheritance) or free transfer of rights (donation) and its nomenclature may vary, depending on the state.

The tax will be levied on the value of the assets received, so that each heir (or donee) is responsible for the payment of their respective share.

In addition, the values of the assets will have as a base date the death of the author of the inheritance or the date of the donation.

The states have autonomy to legislate on the form of incidence, basis of calculation and value of the rate, in which the maximum is 8%, according to Federal Senate Resolution No. 09, of 1992.

The Tax Reform, despite maintaining the maximum rate at 8%, requires all states to institute a progression in the tax rate.

Consequence: states in which there is no provision for progressivity of the rate will have to modify their legislation to comply with the determination.

Some states already charge this tax in a staggered/progressive way, depending on the value of the goods transmitted, such as Rio de Janeiro and Santa Catarina, while others determine a fixed rate, as is the case of São Paulo and Minas Gerais.

• STATE COMPETENT FOR COLLECTION OF ITCMD/ITD/ITCD IN PROBATE PROCEEDINGS

Currently, inheritance tax is collected in the state in which the probate is processed, except in relation to immovable property,  in which tax must be collected at the place where the property is.

After the Tax Reform, the competence to collect the tax will be the state in which the deceased was domiciled, maintaining the exception for immovable property, in which the tax to be collected will be from the state in which the property is located.

Consequence: impossibility of collecting the tax based on the state legislation of the place where the probate is processed,  applying the laws of the state of domicile of the author of the inheritance, instead.

• INCIDENCE OF TAX ON INHERITANCES AND DONATIONS ABROAD

Currently, there is no taxation of the inheritances of:

• assets located abroad;
• deceased with residence abroad; and
• probate processed overseas.

This is because the Federal Supreme Court (STF) decided that the collection of ITCMD / ITD / ITCD is unconstitutional in relation to donations and inheritances instituted abroad, since the states and the Federal District would not have the competence to apply such taxation, due to the absence of a national complementary law to regulate the matter.

The Tax Reform provides rules for the incidence of the tax in the aforementioned situations (until the edition of a national complementary law. They are:

Donation:

• If the donor has domicile or residence abroad, the à competence of the state where the donee is domiciled.
• If the donee is domiciled or resides abroad, the à competence of the state in which the property is located.

Inheritance:

• Jurisdiction of the state where the author of the inheritance was domiciled.
• If the deceased was domiciled or resident abroad, the à competence of the state where the heir or legatee is domiciled.
  
  

• CURRENTLY	AFTER THE REFORM
  There is no taxation	Even without the edition of the complementary law, there will be incidence of ITCMD in relation to inheritance / donation abroad andthe competent state is indicated above.
  Texto do corpo	Texto do corpo
  Rodapé	Rodapé

Consequence: taxation on assets located abroad, deceased persons abroad and probate processed abroad.

Therefore, significant changes in taxation may occur with the Tax Reform and should be taken into account both in the review of existing structures and in future planning.

Category: Life sciences and healthcare

Just a few days after the announcement of the new strategy for the Industrial-Economic Health Complex (Ceis) by the Brazilian government (check out our special material on the subject here), the Federal Audit Court (TCU) decided that the Ministry of Health (MoH) must not celebrate new productive development partnerships (PDPs) until measures are adopted to evaluate technological transfers and objective criteria for the selection of private partners.

The PDP is a type of government partnership that aims to establish cooperation between public and private laboratories for the development, training and transfer of technologies considered strategic for the Unified Health System (SUS).

According to previous announcements made by the MoH, the current PDP framework is being reviewed and a new draft should be put to public consultation soon.

Since 2017, the TCU’s Specialized Health Audit Unit (AudSaúde) has been supervising the progress of the 88 PDPs (85 for medicines and 3 for health-related products) and had already issued recommendations to the MoH for the regulatory framework applicable to partnerships (TCU Judgment 730/17) to be improved.

However, in view of the authority’s inertia, the control body published a new decision (TCU Judgment 2.015/23) with the following

non-extendable determinations:

• within 60 days, the MoH must provide a schedule for the definition and implementation of the criteria and methodologies that must be observed to determine the technology transfer (know how) pricing. On this topic, the MoH reported that the Brazilian Institute of Applied Economic Research (Ipea) was hired to prepare a study on the subject;

• within the same period, public laboratories must also be informed about the need to conduct a selection or pre-qualification process of the private partner, adequately justifying when its realization is not feasible;

• within 180 days of the publication of a new interministerial normative act on partnership modalities – mainly PDPs, technological orders and compensation measures – the MoH must include the verification of compliance with the principles of public law among the criteria for approval of PDPs – in particular those of publicity, legality and morality. A draft of new regulation on the subject is already being made jointly by the MoH, the Ministry of Economy (ME) and the Ministry of Science, Technology and Innovations (MCTI); and

• in the same period, the PDP regulatory framework and the internal regulations of the Technical Evaluation Commission (CTA) and the Deliberative Committee (CD) should be reformulated, establishing:
  • objective parameters for the analysis of project proposals and the assignment of grades to proposals;
  • criteria for the division of responsibilities of public laboratories – when more than one PDP project proposal for the same product is approved; and
  • the need for the CTA to reanalyze proposals related to the same drug and tie-breaking criteria and to readjust market percentages.

It was recommended to the MoH that no new PDPs be concluded until the definition of objective mechanisms to evaluate the completion and effectiveness of the transfer of technologies object of partnership. The MoH was also recommended to:

• establish criteria for evaluation, definition and periodic re-evaluation of products deemed strategic to the public health system (“SUS”) and eligible for partnerships. In addition, future normative rules should mention products that are no longer relevant to the CIS and have been the subject of previous PDPs;
• define criteria for obtaining reference prices for acquisitions made after the PDP is in force, including:
  • studies that demonstrate the economic impact of technology transfer, as well as the benefits achieved with PDP;
  • cost of the active pharmaceutical input (API) produced in Brazil and comparative with values practiced in the international market; and
  • need for the API national production.
• include forecast of the changes in the demand percentages previously defined for a specifc product, considering the following criteria:
  • evaluation of the change in the demand percentages defined in previous PDP selection processes needs to be evaluated by the Secretariat of Science, Technology and Strategic Inputs (SCTIE / MS) and the CTA and deliberated within the scope of the DC;
  • conduction of a joint and detailed assessment of the impact of the new percentages on the forecast of prices broken down in the previously approved projects, since the prices established there consider not only the costs of the products manufactured, but also the technological contribution associated with internalization; and
  • whenever the modification of the public laboratory contemplated in the original selection process proves necessary, the opening of a process for the selection of new projects should be foreseen. This process should follow the ordinary route, with wide publicity and the possibility of participation of any public laboratory of the CIS that shows interest in the partnership. In addition, in these cases, when the annual publication of the SUS Strategic list of products occurs, it should be discriminated, among those that have already been the objects of previous PDPs, those that, justifiably, will have changed the demand percentages originally defined.
• establish the need for MoH’s Secretary of Science, Technology and Innovation to evaluate clauses of tech transfer contracts executed between the public laboratory and the private partner;
• define deadlines for: the performance of the technical team of the MoH’s Secretary of Science, Technology and Innovation in the scope of the extinction of projects; CTA and CD deliberations; analysis of follow-up reports; and conducting technical visits;
• establish a maximum deadline for the inclusion of public laboratory facilities in the sanitary registration of the product and use of locally produced pharmaceutical input; and
• define deadlines, procedures and standard documentation to be used to prove the technology transfer to the public laboratory.

It was also indicated to the MoH to increase the transparency of the acts related to the PDPs, with the disclosure of suspension dates, change of phase of each partnership, composition of the DC, history of the composition of the CTA and the CD, calendar, agenda and periodicity of the meetings of the evaluation and deliberation committees of the PDP.

In addition, comparative spreadsheets should be presented with the price of acquisitions of strategic products made by the MoH. The spreadsheets must include at least the last acquisition made before the PDP came into force, all acquisitions made during its term and the first five acquisitions made after the end of the PDP phase.

The practice of Life Sciences & Health can provide more information on the topic.

Category: Tax

On October 3, 2023, the Brazilian National Congress approved the bill of law n. 4,188/2021 (known as the “legal framework of guarantees”) that among other changes, modified the legal requirements for the application of 0% Withholding Income Tax rate for the earnings and capital gains derived by non-residents investors out of investments in private equity funds (Fundos de Investimento em Participações – FIPs).

The main changes can be summarized as follow:

• Extinguishment of the 40% test: The non-resident investor can hold any percentage of the fund’s quotas or hold the right to receive any percentage of the fund’s earnings.

• Alignment of portfolios’ rules with the regulations issued by the Brazilian Securities Commission regulation.

• Extension of the 0% tax rate benefit for non-resident investors that invest in infrastructure investment funds (FIP-IE) and to sovereign funds, even if such funds are located in tax havens.

• New requirement: the FIP must be qualified as an investment entity, in accordance with regulations to be issued by the National Monetary Council.

The original wording of the bill of law (and its version approved by the House of Representatives) provided that the 0% Withholding Income Tax rate would not be applicable to non-resident investors domiciliated in privileged tax regimes (in addition to the non-resident investors domiciliated in tax havens). Nevertheless, the Senate didn’t approve this restriction and, upon the new round of analysis, the House of Representatives, kept the non-inclusion of the restriction to non-resident investors domiciliated in privileged tax regimes.

The modifications proposed by the bill of law n. 4,188/2021 have previously been introduced by Provisional Measure 1,137/2022, but since it was not converted into law, it ended up losing its effectiveness. The bill of law n. 4,188/2021 will be sent for presidential sanction, which should take place within 15 working days of the receipt. If the President present any vetoes, the vetoes will be subject to consideration by the Congress, that can overturn the presidential vetoes. If sanctioned by the President, the law shall be published.

Category: Life sciences and healthcare

The Federal Council of Medicine (CFM) published on September 13, the Resolution CFM 2,336/23, which updates the ethical rules for medical advertising and publicity. The rule comes into force on March 11, 2024 and will replace CFM Resolution 1,974/11, which currently regulates the matter and imposes a series of limitations on the disclosure of procedures prices, payment modalities/installments and participation in ads, among others.

The new regulation defines medical advertising as the act of promoting physical structures, services and qualifications of the physician or physical or virtual health facilities. Medical advertising, on the other hand, is the act of publicizing matters and actions of medical interest.

Check out the main updates:

• Promotion in social media

CFM Resolution 2,336/23 innovated by setting requirements for the disclosure of doctors' skills and qualifications of physicians and their physical or virtual care environments, on doctors' and establishments' own social networks.  These are considered to be social networks in their own right: websites, blogs, Facebook, Twitter, Instagram, YouTube, WhatsApp, Telegram, Sygnal, TikTok, LinkedIn, Threads and other similar means that may be created.

Besides being informative, advertising and publicity may be aimed at forming, maintaining or expanding a clientele.

The rule also recognizes the possibility of publications and posts by third parties and/or patients praising the procedure’s technique and outcome. However, when they occur repeatedly and/or systematically, the publications will be subject to investigation by the Commission for the Disclosure of Medical Affairs (Codame) of the regional medical councils (CRMs). 

• Using patient images

The regulation also allows the use of patient images or image banks, provided they are for educational purposes and in the following contexts:

• Material on diseases and procedures or related to the specialty, allowing the use of images to inform about manifestations, signs and symptoms that recommend seeking medical evaluation, and may describe possible technical solutions.

• Demonstrations of technique and procedure results, provided that the use of images contains educational text with therapeutic indications, factors that influence possible results and a description of complications. Before and after demonstrations should mention indications, satisfactory and unsatisfactory progress and complications resulting from the intervention.

It is forbidden to use procedures’ images that identify the patient, as well as any editing, manipulation or improvement of the images.

Reposted patients’ self-portraits and testimonies about the doctor's performance should be straightforward, without adjectives that denote superiority or suggest a promise of result.

When the images are taken from the doctor's own files, it is necessary that the patient gives express authorization for the image’s use as well as that his anonymity is guaranteed.

• Commercial conditions disclosure

CFM Resolution 2,336/23 also authorizes the disclosure of commercial information on:

• consultations fee, means and methods of payment;
• rebates and discounts in promotional campaigns; and
• courses cost, consultancies and working groups, with access restricted to physicians to discuss clinical cases and/or updates in the field of medicine.

Professionals can advertise the use of orthoses, prostheses, drugs, supplies and similar, as long as they describe the characteristics and properties of the products used, in accordance with CFM Resolution 2, 316/22, which regulates the prescription of implantable materials, orthoses and prostheses.

The advertisement can also be made when the doctor is the creator or developer of the orthosis or supply, provided that they use the portfolio approved by the National Health Surveillance Agency (Anvisa) and are authorized by the CFM. However, it is forbidden to advertise commercial brands and manufacturers.

• Prohibitions maintained

Some prohibitions that were laid down in the previous resolution have been maintained. Doctors may not assign privileged capacity to devices and techniques, nor take part in advertising for medicines, medical supplies, equipment and any food. Nor can they grant quality seal to food, sports and personal or environments hygiene products, inducing a result guarantee.

 Machado Meyer's Life Sciences & Health practice can provide more information on the matter.

Category: Compliance, investigations and corporate governance

Amidst the celebrations of the 10-year anniversary of the Anti-Corruption Law (Law 12.846/13 – LAC), the Comptroller General’s Office (CGU) has organized and participated in several discussions on the balance of the law’s application so far and the next steps for its implementation.

In this brief article, we aim to clarify the initiatives already announced and discussed, as well as the highlights of the balance.

Review of the 10 years of the Anti-Corruption Law

Both business and government entities agree that the law has brought significant institutional advancements and that its first challenge – that of being enforced – has been so far fulfilled.

The numbers of punishments and the amounts of fines are impressive, and it is undeniable that LAC has encouraged private companies to adopt preventive programs. According to a survey conducted by Transparency International with executives of large companies, released on July 31 of this year, 95% of respondents stated that the law contributed to the adoption of compliance programs.

It is also consensus, nevertheless, that there are significant challenges to be faced. When “Lava Jato” began, the immaturity of LAC led to its application in complex cases before the necessary structure for it was in place. This brought asymmetries, especially in agency conflicts.

Moreover, there is little legal certainty regarding the interpretation of several provisions of the law. States and municipalities still struggle with the law’s regulation and enforcement, and the encouragement for integrity programs remains limited to large corporations and multinational corporations.

Key changes announced by CGU

• BNDES and CGU sign agreement on compliance requirements for borrowers with the bank.

BNDES will follow the example of the New Brazilian Public Procurement Law, which requires contractors in high-value bids to have integrity programs, and will require the bank's borrowers to have mature compliance initiatives.

The regulation that will govern this matter – a technical cooperation agreement between BNDES and CGU – has been announced, and the forthcoming text is expected to bring more details on practical implementation and the consequences for companies.

What is already clear is that the agreement will directly impact the bank's major financing operations. The statements of the president of BNDES at the signing of the agreement gave some clues about what will be in the text:

• BNDES will require a compliance program for any financing above R$300 million;
• This program should include not only anti-corruption controls, but also comprehensive measures of governance, transparency and, most importantly, promotion of human rights and sustainability;
• A mere self-declaration of conformity will not suffice. That is, there will be oversight to ensure compliance with the measures;
• The bank will act within its collegiates to advocate for similar norms to be adopted by private banks as well.

When the regulation is formally published, Legal Intelligence will provide further details. For now, it is already possible to point out that the cooperation agreement between CGU and BNDES serves as a warning to companies that do not yet have integrity initiatives, encouraging them to align with best market practices. This also demonstrates that there is still room for development and maturation of the Brazilian market on this topic. In recent years, there has been an increase in the number of laws that require companies to adopt compliance programs.

The provision will come into force already for the new PAC (Growth Acceleration Program) and is inspired by the French anti-corruption legislation, Sapin II, which includes regulatory agency audits of the compliance program of large companies in the country and establishes sanctions not only for acts of integrity breaches, but also for weaknesses in preventive programs.

On the other hand, oversight raises concern. It will be necessary to observe whether the text and the actions of regulatory bodies will allow for a substantial evaluation of these programs, that is, an assessment that goes beyond a checklist of formal measures. At the same time, the regulation cannot be so overly open-ended to the extent that it grants auditors excessive discretion, leading to legal uncertainty and opacity of the procedure.

• Pro-ethics seal will to encompass broader themes related to human rights

CGU has signed a cooperation agreement with the Ministry of Human Rights for the new Pro-ethics seal, historically awarded to companies with good anti-corruption compliance programs. Now, the seal will also cover topics related to the implementation of good practices in human rights, such as confronting conditions akin to slavery.

While this measure strengthens the human rights agenda, there is concern that CGU may further deepen a trend to broaden the application of the LAC to acts unrelated to corruption.

• Innovations in agreements in the context of accountability processes

The leniency agreement is one of LAC institutes that has faced criticism in its application. It was designed for cases in which a company would proactively disclose unknown issues to the authorities. However, this institute has been used in situations where a company seeks to reach a settlement without presenting new evidence or relevant information.

The CGU now seeks to distinguish two types of agreement:

• Leniency, in which the company has new information to provide, thereby gaining more benefits; and
• Term of commitment, which applies when the company does not have new elements of collaboration but wishes to waive its rights of defense to expedite the process.

The innovation is precisely regarding the term of commitment, a new legal figure that CGU has put up for consultation and that is expected to guide the cases of early judgment.

In addition, CGU announced the publication of a guide with guidelines for the negotiation of leniency agreements, something very similar to what CADE already does in competition matters. A public panel has also been created to ensure transparency to the fulfillment of agreements already signed with companies.

Category: Labor and employment

The Labor Reform (Law 13.467/17) changed, among other points, rules on the breaks for rest and feeding during the working day.

Before the Labor Reform, in force since November 11, 2017, there were discussions about whether the payment resulting from the suppression of the breaks for rest and meal would have a compensatory or salary nature.

Later, however, the Brazilian Labor Laws (CLT) expressly established that this payment has a compensatory nature, which results from the suppression of the employee's right to the rest and meal breaks. Since then, the case law of the Labor Court follows the new rule, characterizing this amount as compensation.

The legal security that is seen before the Labor Court does not seem to reach the taxpayers. Even with the compensatory nature of the amount arising from the suppression of the breaks for rest and meal, which is not part of the employee's salary, the Brazilian Federal Revenue Office (RFB) expressed the understanding that such payment would serve as basis for calculating social security contributions.

With this, the RFB attributes remunerative treatment – and not compensatory – to this amount, as evidenced in the Cosit 108 Consultation Solution, published on 06/14/2023 (SC 108/2023).

In the opinion of the RFB, without a legal provision to expressly establish that the payment in question does not fall within the concept of contribution salary defined by the , the change brought by the Labor Reform would have effects only in the labor/employment sphere, without tax consequences.

By concluding something expressly ruled with by law to the contrary, SC 108/2023:

• violates the hierarchy of norms;
• ignores the difference between non-incidence hypothesis and tax exemption; and
• disregards the fact that tax law is a right of overlap that cannot alter rights already regulated by their respective legal fields.

This is an issue that tends to be discussed by Brazilian courts, even if the discussion about it did not seem to exist.