The Supreme Federal Court (STF) decided, on Wednesday (26.FEV.2025), that the ISS (Service Tax) cannot be charged in operations known as “Industrialization by order” – When a company conducts an intermediate stage of the production process without marketing the final product.
The decision was taken at the judgment of the RE (Extraordinary Appeal), which had recognized general repercussion (theme 816). This means that the thesis signed by the Supreme Court will serve as a reference for similar cases across the country.
Understanding of the Supreme Court
By majority, the ministers understood that order industrialization is part of the productive cycle of goods and goods, but does not constitute a taxable service by ISS. As it is an intermediate phase of production, taxation must fall on ICMS (state) or IPI (federal), depending on the case.
Minister Dias Toffoli, rapporteur of the process, argued that if the good returns to circulation or goes through new industrial steps after the order, this activity cannot be considered an autonomous service, but part of the production chain. Minister André Mendonça, in presenting his vote, reinforced this understanding.
Only Minister Alexandre de Moraes voted against this thesis, arguing that the ISS could be applied.
Or case
The appeal was presented by a Counting Company (MG) that requalifies custom steel plates, providing the material for construction. The company argued that its activity does not constitute an independent service, but a stage of the industrialization of steel, subject only to ICMS and not to ISS.
Modulation
To guarantee legal certainty, the Supreme Court determined that the decision will have only effect from the publication of the Minutes of the trial. That is, companies that collected ISS about this type of activity before that date will not need to pay ICMS or IPI retroactively.
At this point, ministers Cristiano Zanin, Alexandre de Moraes and Gilmar Mendes diverged, arguing that the modulation should not include IPI.
LIMIT FOR TAX FINES
Unanimously, the Supreme Court has also defined that fines imposed by Union, States, Federal District and Municipalities due to the payment of taxes may not exceed 20% of the amount due.
General Repercussion Thesis
The thesis set by the STF was as follows:
- The incidence of ISS on sub -item operations 14.05 of the list attached to LC 116/03 is unconstitutional when the activity is intended for the industrialization or marketing of goods;
- The moratorium fines applied by federative entities must respect the limit of 20% of the tax debt.
With this decision, companies that make industrialization by order are more clear about the taxation of their activities.
