Publications

Category: Tax

Companies have challenged in court the obligation to pay social security contributions (employer's, third-party, and Environmental Labor Risk - RAT) on amounts paid to minor apprentices, considering the peculiar nature of this labor relationship.

Following the constitutional guideline, the Apprenticeship Law (Law 10,097/00) is a strategic and relevant measure for the integration of young people into the labor market, which contributes to the prevention of child labor. The hiring of minor apprentices is a mandatory requirement dealt with in article 429 of the Consolidated Labor Laws^[1] and article 51 of Decree 9,579/18, which imposes a duty on establishments to employ the equivalent of 5% to 15% of workers whose jobs require professional training.

The apprenticeship contract is a special labor contract set out in writing for a fixed term of up to two years, signed with young people over 14 years of age and under 24 years of age, as provided for in article 428 of the Consolidated Labor Laws and article 45 of Decree 9,579/18.

According to the tax authorities, young apprentices are linked to the General Social Security Regime (RGPS) as a compulsorily insured person, which justifies the requirement of social security contributions. This interpretation is supported by article 6, II, of RFB Normative Instruction 971/09^[2] and article 8, II, of INSS/PRES Normative Instruction 77/15,^[3] which classified young apprentices as compulsorily insured persons under the RGPS.

However, considering the peculiarity of this relationship, the companies contend that minor apprentices are optionally insured under the terms of articles 14 of Law 8,212/91^[4] and 13 of Law 8,213/91^[5], such that social security contributions are not necessarily due on their remuneration.

This understanding is supported by Decree 9,579/18, which removes apprenticeship contracts from the employment relationship by establishing that failure to comply with the legal and regulatory provisions would result in the nullity of the contract and the establishment of an employment relationship directly with the responsible employer.

It is worth pointing out that Decree-Law 2,318/86, when dealing with the sources of Social Security funding and the hiring of minors at companies, prohibited linking to social security minors between 12 and 18 years of age who attend school and work four hours a day.

Recent decisions handed down by the 3rd Federal Court of Santo André and the 9th Federal Court of Manaus have established that social security contributions should not be levied on the remuneration of minor apprentices. These decisions were based on the non-employment nature of the apprenticeship contract and on the effectiveness of Decree-Law 2,318/86, which rules out the levying of social security contributions.

Given this scenario, we believe that the issue of the minor apprentice is not yet mature in the case law and, due to the resistance of the tax authorities, material debates are likely to occur in the coming years.

^[1] Article 429. Establishments of any kind are obliged to employ and enroll in courses of the Brazilian Apprenticeship Services a number of apprentices equivalent to a minimum of five percent and a maximum of fifteen percent of the workers existing in each establishment, whose jobs require professional training.

^[2] Article 6. The following must contribute as an insured employee: (...)

II - apprentices, older than fourteen (14) and younger than twenty-four (24) years old, except for the disabled, to whom the maximum age limit does not apply, as provided for in article 428 of the Consolidated Labor Laws (CLT), approved by Decree-Law No. 5,452, of May 1, 1943, as amended by Law No. 11,180, of September 23, 2005; (...)

^[3] Article 8. The following are insured persons in the employee category, as per subsection I of article 9 of the Social Security Regulation, approved by Decree No. 3,048, of May 6, 1999: (...)

II - apprentices, fourteen to twenty-four (24) years old, subject to the methodical professional training of the trade in which they works, observing that hiring may be done by the company where the apprenticeship will take place or by non-profit entities, whose objective is to assist adolescents and provide professional education, in compliance with the requirements of Law No. 10,097, of December 19, 2000, and Law No. 11,180, of September 23, 2005; (...)

^[4] Article 14. An optionally insured is any individual over fourteen (14) years of age who joins the General Social Security Regime, by means of a contribution, as provided for in article 21, as long as it is not included in the provisions of article 12.

^[5] Article 13. An optionally insured is any individual over fourteen (14) years of age who joins the General Social Security Regime, by means of a contribution, as long as he is not included in the provisions of article 11.

Category: Tax

In response to the great expectation of taxpayers on the topic, the Brazilian Federal Revenue Service (RFB) and the Attorney General of the Brazilian Treasury (PGFN) issued, on May 3, 2022, Notice 09/22, which deals with the settlement of tax debts arising from tax amortization of goodwill under the legal regime prior to the Law 12,973/14.

This is a settlement in tax litigation of a material and widespread legal controversy. Debts under administrative or judicial discussion, registered or not as outstanding debt, involving legal controversies resulting from:

• Tax use of goodwill amortization expenses resulting from the acquisition of an ownership interest, limited to merger, consolidation, and spin-off transactions that took place by December 31, 2017, whose ownership interest was acquired by December 31, 2014; and
• Addition of the respective goodwill amortization expenses in the determination of the Social Contribution on Net Income (CSLL) calculation basis.

Taxpayers that opt for settlement must indicate all the debts related to the same legal controversy, in addition to:

• Presenting irrevocable and irreversible admission of debts, withdrawing from administrative or judicial litigation; and
• Waiving claims of the rights on which the litigation is based.

Adhesion may be formalized between May 2, 2022, and July 29, 2022, by 7 pm, through the portal e-CAC, if the debt is linked to the RFB, or through the portal Regularize if the debt is linked to the PGFN.

The taxpayer must expressly consent to the sending of communications and summonses to its electronic tax domicile, since all summonses will be served electronically.

The payment can be made within up to five years, applying the Selic rate for adjustment for inflation of the installments. The discounts granted will be applied over the principal, fine, interest, and charges, calculated on a regressive basis, depending on the number of installments.

Initially, it is necessary to pay 5% of the tax debt without reductions, which can be divided into five successive monthly installments. The discount percentages will be applied to the remaining balance due, according to the number of installments chosen, after total settlement of the down payment, as shown in the table below:

In cases of deposits linked to the debt subject to the transaction, adherence to the transaction will result in automatic conversion of the deposits into income in favor of the Federal Government. Thus, the discounts provided above will be applied only to the remaining balance.

Moreover, adhesion to the settlement does not entail release of the encumbrances resulting from the pledging of assets, tax preventive measures, and collateral presented administratively or judicially. This collateral can only be withdrawn when the settlement agreement has been fully discharged and provided that there are no other debts registered as Outstanding Federal Debt (DAU).

Among the obligations that must be fulfilled by the taxpayer are the following:

• Be subject to the understanding given by the tax authorities in relation to the theory that is at issue in the settlement, including in relation to future taxable events or those not yet consummated;
• Maintain good tax standing with the FGTS; and
• Bring into good standing all debts that may be entered in the DAU or that become due after the formalization of the settlement agreement within 90 days from the date of entry.

The public notice also establishes the scenarios for terminating the settlement, such as not paying in full the down payment, failing to pay three consecutive or six alternating installments, and failing to pay two installments, with the others paid.

Termination will entail, among other measures, resumption of the collection of debts, with authorization to foreclose on the collateral presented. The taxpayer will be prohibited from entering into any settlement for a period of two years, even if related to different debts.

Before adhesion, it is recommended that one analyze the company's situation individually, not only to consider the peculiarities of the concrete case, but also the global effects of the strategy, evaluating the impacts on the discussion of goodwill itself in the legal regime prior to Law 12,973/14.

Category: Crisis management

The laws and regulations on ventures with environmental impact, such as tailings and waste dams resulting from extractive and industrial activity, has undergone constant evolution over the years, especially because of the events involving these structures. In this document, we analyze the main rules that deal with the subject, including specific laws of the State of Minas Gerais, and highlight measures to be adopted by companies in order to comply with the new regulations.

Click on the button below to download the material with the outlook for the State of Minas Gerais on the topic. To access the ebook with the national outlook, click here.

Category: Intellectual property

Publication of the PTO is an important source for assess risks and indicate appropriate mitigating recommendations in business operations involving trademarks

In this article, we present a selection of some understandings contained in the decisions presented in the Collection of Decisions of the 2nd Administrative Instance,^[1] a publication focused on brand issues, launched by the National Institute of Industrial Property (INPI) in December 2021.

The collection compiles the technical opinions of the last 20 years used as a basis for decisions of appeals and administrative nullity proceedings (PAN), brought in trademark registrations. In it we find the interpretation of the 2nd administrative instance on the legislation in force at the time and the final understanding in paradigmatic cases.

As a caveat in the edition, the understandings of the compiled decisions are subject to the change, with future effectiveness, by the General Coordination of Appeals and Administrative Processes of Nullity or by the administrative body itself.

Highlights of the collection

The text presents some decisions on the license of the trademark sign, which covers the lawfulness of the trademark sign as a whole. The understanding that "the graphic representation of official or public monument can be registered as a trademark, provided that sufficiently stylized"^[2] is an example.

Applications for registration of trademarks whose designs are referred to official or public monuments, such as the Statue of Liberty, could not be registered, pursuant to Article 124( I) of the Intellectual Property Act ( LPI ) (Law 9.279/96). This provision provides that a sign required as a mark will not be registerable when it comes to reproduction of official, public, national or international monuments, as well as their respective designations or imitations.

However, in accordance with the criteria established by the INPI'sTrademark Manual (Trademark Manual) in the analysis of similar matter, can be registered the sufficiently stylized marks, whose traces used differentiate it from the original monument.

Also, in regard to Article 124, I of the LPI, another understanding established was that "the recognition of a listed heritage building does not prevent the registration of its denomination as a trademark by a third party",^[3] which is in accordance with the jurisprudential understanding of the Superior Court of Justice (STJ) that this recognition is an act of civil life for the protection of cultural heritage. It does not, therefore, have any effect on the commercial sphere, including in relation to the registration of trademarks.

The collection brings decisions about the distinctiveness of the trademark sign. There are understandings such as that "it is unregistrable the marcary set that has as main element term considered unregistrable, even if required in mixed form of presentation, which does not confer sufficient distinctiveness to the set".^[4] In such cases, it is necessary to verify that the brand has sufficient differences that do not relate it to an existing product/service.

Even if they are mixed, trademarks that do not have relevant fantasy elements in the marcary set to make them distinct or graphic representations sufficient to characterize the distinctiveness of the unregistrable nominative element are in disagreement with Article 124, item VI, of the LPI. Therefore, they cannot be registered.

In relation to the veracity of the trademark sign, it was decided that "it is unregistrable as a mark the derivative term of geographical indication that induces the perception of commercial establishment, by configuring false indication as to the quality of the product/service indicated".^[5]

For example, marks that reference a particular location, such as the Champagne region in France, cannot be registered. The word "Champagne", in this case, is registered in the PTO as a geographical indication, designates the origin of wines and sparkling wines from that region in France. Its registration, therefore, is prohibited according to::

• Article 124, items IX and X of the LPI, which seal, the registration of a geographical indication trademark or the use of a sign that improperly induces geographical indication; and
• understanding signed in NOTE/INPI/PRESIDENCY/CGREC/COREM/No. 01/2018, that terms derived from geographical indication, as in the present case, cannot be registered either.

In addition, Article 182 of the LPI determines that "the use of the geographical indication is restricted to producers and service providers established in that location, and it is also required, in relation to designations of origin, the fulfillment of quality requirements".

The granting of the registration of the mark, in this case, could also infringe the consumer's right by misleading him by linking the marketed product to those effectively protected by the geographical indication, with specific fame and quality.

On the availability of the trademark sign, the collection brought the understanding that "the descriptive expression of the marked product/service associated with the geographical name indicative of the place of origin or provision of the product/service can be registered as a mark".^[6]

This is because, according to the consolidated understanding of the PTO, these marks have less protection under Article 124, item XIX, of the LPI, because they have a low degree of distinctiveness, being considered "evocative/suggestive trademarks". They should live with other similar trademarks, if there is a minimum degree of difference between them.

As the trademarks in question are composed of common elements in a given segment, which are considered unregistrable individually, they require distinctive elements between them, such as the association with the name of the city of provision of that service, provided that it is actually provided in the indicated locality.

Another understanding also related to the availability of the trademark sign is that "a term whose meaning does not maintain an immediate/direct relationship with the products or services indicated is registrable as a trademark, observing the non-exclusivity to the use of the term in its real meaning”.^[7]

For example, a restaurant may use as a trademark the name of a specific food, with the caveat that this record does not exclude from the common property the rights to use that particular word as an identifier of the food by competitors.

In such cases, the trademark must have a mediate relationship with the services provided, not focusing on the rule provided for in Article 124, item VI of the LPI, which seeks to maintain the public domain on terms commonly used to identify products and services, to avoid monopoly and to ensure free competition.

Also, in relation to the availability of the trademark sign, it was decided by the "possibility of registering a similar or identical trademark in an equal or related market segment on behalf of companies belonging to the same economic group."^[8]

In the case, trademarks cannot imitate a figurative element of a previous trademark, owned by a third party, which is not the case where it has been demonstrated that the trademark sign indicated as an impediment belonged to the company of the same economic group as the applicant for registration.

If there is no evidence of unfair competition in the specific case, it is understood that there is the possibility of registering a similar or identical trademark, in the same market segment, on behalf of companies of the same economic group, subsidiaries or controlling companies. The express authorization by the company holding the previous registration, in this case, is dispensable, provided that the provision of Article 124 of the LPI is respected, which prevents there being two or more marks for the same product or service.

About the expiry of trademark registration, the collection brought some understandings, such as that there are "legitimacy of the bankrupt estate to request expiry provided that it regularly represented by the liquidator".^[9]

In order to grant the application for expiry of the trademark registration,, it is necessary to prove the applicant's legitimate interest, as provided for in the Trademark Manual.

The discussion – treated in THE NOTE/INPI/PRESIDENCY/CGREC/No. 20/2011 – involved the legitimacy of the application of the bankrupt estate, which was already in the condition of bankrupt estate at the time of the application and was the holder of a registration application that was paused due to the expiry of the registration.

It is understood that the bankrupt mass has a legitimate interest in requesting expiry of the trademark registration, if it is duly represented by the liquidator (currently judicial administrator). This is because the bankrupt estate is constituted at the time of the bankruptcy of the company, encompassing all its assets, which are now represented by the judicial administrator.

The collection also brought the understanding that the "copyright is a legitimate interest for an application for expiry of a conflicting trademark registration."^[10]

Even if the application for the expiry of a particular trademark is made by an applicant who has not requested registration or registration of that mark in the PTO, the legitimate interest for the application is configured, where it is established that the applicant is the copyright owner – if, for example, applicable to a work or character, in which the right of protection in the face of the conflicting mark is appropriate, in accordance with Article 18 of the Law 9610/98.

There are also compiled decisions on procedural matters, including the one establishing that "the guarantee of priority care for the elderly does not apply to the legal entity, even if it has elderly people in its corporate structure."^[11]

It was established that the priority care provided for in the Statute of the Elderly can only be granted when the application for registration or registration of trademark is under the ownership of an individual over 60 years, also reiterating the understanding of the Specialized Attorney of the PTO, through the OPINION / INPI / PROC / DIRAD No. 14/08. The justification is the fact that legal entities have personality and assets different from those of the partner, not applying to them rights and guarantees inherent to human persons.

The collection is extremely relevant for knowledge, analysis, and debate about the understandings of the 2nd Administrative Instance of the PTO involving trademark registrations and applications, by all interested parties, such as holders, third parties, lawyers, industrial property agents and examiners.

The decisions compiled are also important for assessing risks and indicating appropriate mitigating recommendations in trade operations involving trademarks. These recommendations should be compatible with the current and consolidated positioning of the PTO in order to avoid losses or delays for the parties and their operations.

^[2] Process 827661746; Decision to appeal against the rejection published in the Industrial Property Journal (RPI) no. 2263 of 20/05/2014.

^[3] Processes 828293015 and 828293007; PAN Decision published in RPI No. 2334 of 29/09/2015.

^[4] Process 824936841; Decision to appeal against the rejection published in RPI 2215 of 18/06/2013.

^[5] Process 900326760; Merit requirement published in RPI 2457, 02/06/2018.

^[6] Process 823723240; PAN Decision published in RPI 2128, 10/18/2011.

^[7] Process 819091243; Decision to appeal against the rejection of a trademark registration application published in RPI 1876 of 19/12/2006.

^[9] Process 006924611; Merit requirement published in RPI 2120, of 08/23/2011.

^[10] Process 817641866; Decision to appeal against the rejection of an application for expiry published in RPI 2123, 13/09/2011.

^[11] Process 823870790; Decision to apply for priority examination communicated to the applicant pursuant to Article 226(II) of the LPI.

Category: Tax

Complementary Law 192/22 regulated the iCMS single-phase incidence regime on fuels, provided for in Article 155 paragraph 2^nd, XII, ‘h’ of the Federal Constitution, among other measures. The single-phase regime shall be applicable to the following fuels:

• Gasoline and ethanol anhydrous fuel;
• diesel and biodiesel; and
• liquefied petroleum gas, including natural gas derivatives.

Under the single-phase regime, the ICMS on these fuels will be charged only once on the supply chain. It shall be collected by producers (including those who produce fuels in a residual manner, fuel formulators by mechanical mixing, petrochemical plants, oil refineries and other establishments treated as producers), at the time of the exit of the products from their establishment, or by importers at the customs clearance of the product.

The complementary law also states that the rates under such regime will be Ad Rem, that is, they will be specific nominal values per unit of measure of the product and should be fixed through deliberation of the states and the Federal District within the definitions of the National Council of Treasury Policy (Confaz).

The rates should be uniform in the national territory, however it can be differentiated by product.  The first amendment will have to comply with a minimum period of 12 months after its fixation and at least six months for subsequent adjustments.

The definition of the initial rates and their adjustments should observe estimates of fuel price developments. The goal is to avoid the proportional increase of its load in the formation of the final price to the consumer.

Specifically for diesel, a transitional rule has been established until 31 December 2022 or until the single-phase fuel rate is set. During that period, the tax calculation basis for tax substitution purposes would correspond to the moving average of the average prices to the final consumer in the 60 months preceding its fixing. The single-phase tax rate for diesel was established  by the ICMS  Agreement 16 of March 24, 2022.

The allocation of the tax levied under Complementary Law 192/22 will depend on the type of fuel (derived from oil or not) and on its recipient (taxpayer of ICMS or not), and shall be due:

• to the state where the consumption occurs, in transactions with petroleum-derived fuels;
• to the states of origin and destination, in interstate transactions between taxpayers, with non-petroleum fuels, dividing in the same proportionality used for transactions with other goods; and
• to the state of origin, in interstate operations for non-taxpayers of ICMS with non-petroleum fuels.

The complementary law also establishes compensation mechanisms between the states and the Federal District, such as clearing house or other instruments, with attributions related to the funds collected as a result of the single-phase incidence of the ICMS. It also establishes the possibility of assigning responsibility for withholding and collecting ICMS to tax taxpayers or to depositories of any security.

The granting of tax incentives on transactions with fuels subject to the single-phase regime will also depend on the edition of the ICMS Agreement by the states under Confaz.

The law reduced to zero, until December 31, 2022, the PIS and COFINS rates on the gross revenue of producers and importers arising from the sale of diesel oil and its subsidiary products, biodiesel and liquefied petroleum gas, derived from oil and natural gas, and aviation kerosene.

The same treatment was granted to the PIS-import and COFINS-import rates levied on import transactions with the same products mentioned above.

Complementary Law 192/22 also suspended the effects of the financial and budgetary adequacy rules provided for in Complementary Law 101/00 and Law 14,194/21, in relation to ICMS, CIDE-Fuels, PIS, COFINS and other contributions to social security.

Access the article of  the ICMS Agreement 16/22, which disciplined the single-phase incidence of ICMS for diesel oil.

Category: Tax

The ICMS Agreement 16/22, published in the Official Gazette on March 25, regulated the single-phase incidence of ICMS for diesel oil, establishing the following rates in the transactions with the product:

The amount of ICMS due will be the result of multiplying the above rate by the volume of fuel consumed in each federated unit.

The ICMS Agreement 16/22 also granted to the states an authorization to use tax burden equalization factors per liter of fuel, applicable to the outputs with diesel oil, even if mixed, destined to their respective territories.

The tax burden equalization factor for each state is provided for in Annex II of the ICMS Agreement and may not be higher than the value of the difference determined between the new Ad Rem rate and the effective tax burden in force on the date of publication of the agreement.

In practical terms, the equalization factor reduces the tax burden of ICMS in transactions with diesel oil depending on the recipient state, maintaining a tax burden similar to the one applicable when complementary law 192/22 was published.

In the case of subsequent interstate transactions, equalization factors of the recipient and origin states should be compared, with the following implications:

Both the Ad Rem rate as the tax burden equalization factors will be in force for a minimum period of 12 months from the date of publication of the agreement.

The ancillary obligations arising from the provisions of the agreement will still be regulated by means of a SINIEF  Adjustment to be published by Confaz.

The ICMS Agreement 16/22 entered into force on March 25, 2022 (date of its publication), producing effect as from July 1^st, 2022.

To learn more about the single-phase ICMS regime, see the article on Complementary Law  192/22.