Tax Compensation: Missed the 5-Year Deadline? You Could Lose Your Credit

If you won a court case and have credits from taxes paid improperly, pay attention: the STJ (Superior Court of Justice) ruled that tax compensation (offsetting tax credits against tax debts) must be started and completed within five years. Ignoring this deadline could mean losing your tax credit.

What did the STJ decide about tax compensation?

According to the STJ's most recent decision, tax compensation of judicially recognized credits must comply with a five-year deadline, counted from the trânsito em julgado (the date a court decision becomes final and unappealable).

Previously, it was enough to simply begin the compensation process within that period. Now, the rule has changed: all compensation declarations (PER/DCOMP, the tax refund/offset request forms filed with Brazil's federal tax authority) must be completed within this deadline, or the credit risks becoming time-barred and being lost.

How does this affect your company?

If your company has large amounts of PIS and COFINS (federal social contribution taxes) to recover, or any other tax paid improperly, corporate tax planning is essential. Leaving compensation to be done gradually, or without a clear strategy, can result in tax credits becoming time-barred.

Tax refunds: you have the right, but also a deadline

Refunds for taxes paid improperly are only guaranteed if you act in time. The statute of limitations for tax compensation is set by law and was reaffirmed by the STJ, invalidating previous practices that allowed indefinite offsetting.

What should you do now?

✅ Consult a tax attorney.

✅ Review your PER/DCOMP filings already submitted.

✅ Make sure all compensations are completed within the 5-year deadline.