STF allows retention of ICMS credits on intrastate transactions preceding interstate fuel shipments
On September 4, 2026, the Full Court of the Brazilian Supreme Court (STF) concluded its judgment of General Repercussion Topic No. 1,258 and held that ICMS credits arising from the intrastate transaction preceding an interstate transaction involving petroleum-derived fuel destined to another State may be maintained. Because the case was decided under the general-repercussion framework, the holding must guide the Judiciary and tax administrative authorities throughout Brazil.
By six votes, the position of the reporting Justice, Dias Toffoli, which favored the taxpayer, prevailed. According to Justice Toffoli, disallowing the credits would result in “double burden”, with ICMS imposed both in the State of origin and in the destination State.
The holding provides that the ICMS immunity applicable to the State of origin in an interstate transaction involving petroleum-derived fuels, under Article 155, paragraph 2, item X, subitem ‘b’, of the Federal Constitution, “does not require reversal of the tax credit relating to prior intrastate transactions.”
Justice Dias Toffoli was joined by Justices André Mendonça, Cristiano Zanin, Luiz Fux, Nunes Marques, and Gilmar Mendes.
Justice Alexandre de Moraes dissented, adopting a position unfavorable to the taxpayer. According to Justice Moraes, the dispute falls within the exceptions expressly set forth in the Constitution to the non-cumulativity rule. Under that view, the immunity would not generate a credit available for offset against tax due on subsequent transactions or services and would require reversal of the credit relating to prior transactions.
As a proposed holding, Justice Moraes argued that “maintenance of ICMS credits relating to intrastate transactions preceding an interstate transaction involving petroleum-derived fuel, on which no tax is imposed in favor of the State of origin, is permitted only when expressly provided for by law, under Article 155, paragraph 2, items II and XII, subitem ‘f,’ of the Federal Constitution.”
Justices Flávio Dino, Cármen Lúcia, and Edson Fachin joined the dissent.
As a result, the STF held that the ICMS immunity applicable to interstate transactions involving petroleum-derived fuels does not require reversal of credits arising from prior intrastate transactions.
STF rules out PIS and Cofins on financial income from insurers’ technical reserves
On September 2, 2026, the STF’s Full Court concluded its judgment of General Repercussion Topic No. 1,309, which addressed the imposition of PIS and Cofins on financial income arising from the investment of insurers’ technical reserves.
By majority vote, the Court partially granted the taxpayer’s Extraordinary Appeal and recognized, in the specific case, the right to exclude such income from the calculation base of PIS levied on turnover.
The STF also ordered that the amounts unduly paid be included in the previously authorized offset, subject to the applicable statute of limitations.
In deciding the dispute under the general-repercussion framework, the Court adopted the following holding:
I. PIS and Cofins, when calculated on turnover, must be levied on gross operating revenue arising from the taxpayer’s ordinary business activities, without prejudice to statutory exclusions and deductions;
II. Income from financial investments of insurers’ technical reserves does not form part of the calculation base for PIS and Cofins levied on turnover, pursuant to Law No. 9,718/1998.
This publication is intended for informational purposes only and does not constitute legal advice. Our Indirect Tax team remains available to provide specific legal guidance tailored to your business needs.
