On January 31, 2025, Notices No. 1/2025 and No. 2/2025 from the National Treasury Attorney General’s Office (PGFN, in Brazil) were published in the Official Gazette, announcing extensions for the deadlines to join tax settlements and the final date for registration in the Union’s active debt for eligible credits, as set out in PGDAU Notices No. 06/2024 and No. 07/2024, respectively. These relate to Micro-Entrepreneurs, Microenterprises, and Small Businesses under Brazilian law.

What is a Tax Settlement?

A tax settlement is a method for resolving disputes between the tax authorities and taxpayers, under conditions established by law. It involves mutual concessions that lead to the resolution of the controversy and the extinguishment of the involved tax credit (Article 156, III, and Article 171 of the National Tax Code in Brazil).

At the federal level in Brazil, without prejudice to other possibilities, tax settlements involving the collection of credits from the Federal Treasury can occur by adhering to the PGFN proposal, duly published in a notice (cf. Law No. 13,988/20 and PGFN Ordinance No. 6,757/22).

In this context, through PGDAU Notice No. 06/2024 (published in the Official Gazette on 11/04/2024), PGFN introduced settlement modalities for the negotiation of credits registered in the Union’s active debt, with a consolidated value not exceeding BRL 45 million.

Additionally, PGDAU Notice No. 07/2024 (published in the Official Gazette on 11/04/2024) presented tax settlement proposals specifically for credits registered against Individual Microentrepreneurs (MEI), Microenterprises (MEs), and Small Businesses (EPPs). The detailed modalities in Notice PGDAU No. 07/2024 and the amendments made by Notice No. 2/2025 will be presented at another time.

Regarding PGDAU Notice No. 06/2024, among the proposed settlement modalities, we highlight:

Settlement by Adherence in the Collection of the Union’s Active Debt:

• Debt Installment Plan: The general rule is for full payment within 60 months. However, longer terms may be arranged based on Payment Capacity (CAPAG) or the recoverability degree of the debt (Articles 24 and 25, PGFN Ordinance No. 6,757/22), given other conditions in the Notice, including an initial payment of 6% of the total debt value.
• Discounts: Generally, no discounts are granted. However, there can be a reduction of up to 100% of interest, fines, and legal charges (limited to 65% of the total for each registration) based on Payment Capacity (CAPAG) or recoverability (Articles 24 and 25 of PGFN Ordinance No. 6,757/22).

Settlements for Registrations Backed by Insurance or Surety Bonds: Applicable when there is an unfavorable final ruling for the taxpayer, and the credit under discussion is guaranteed by insurance or surety (before the occurrence of a claim/execution of the guarantee).

• Initial Payment and Installment Plan: The installment term varies with the initial payment: (i) 50% down payment (remaining in 12 monthly installments); (ii) 40% down payment (remaining in 8 installments); (iii) 30% down payment (remaining in 6 installments).
• Discounts: No discounts are provided in this modality.

These modalities were eligible only for credits registered in the Union’s active debt up to August 1, 2024, with the final date for enrollment in the settlement being January 31, 2025.

Extension of Deadlines: New Enrollment Opportunities

Considering the above modalities, the changes introduced by Notice No. 01/2025 are highlighted:

• Final registration date in the Union’s active debt for eligible credits (Article 2°, I, Notice No. 06/24): extended to October 31, 2024;
• Enrollment deadline for the settlement (Article 3°, caput, Notice No. 06/24): extended until 7 PM (Brasília time) on May 30, 2025.

Enrollment is exclusively through REGULARIZE, available at www.regularize.pgfn.gov.br.

Final Remarks: Strategic Aspects of Tax Settlement

Below are strategic considerations related to the decision to adhere to a tax settlement:

• Probability of Success: If the registered credit (eligible for settlement) is still under judicial discussion, it’s recommended that the decision to adhere consider legal advice for evaluating the likelihood of success in each case. The benefits of adhering to a settlement may be assessed based on this probability.
• Payment Form: The modalities in PGDAU Notice No. 06/2024 do not allow the use of credits from tax loss carryforwards and negative CSLL (Social Contribution on Net Profits) adjusted basis.
• Payment Terms: The term is a maximum of 60 months for the settlement in the collection of Union’s active debt, in situations where (i) no discounts are granted due to CAPAG, or (ii) the registered credits relate to social contributions specified in Article 195 of the Federal Constitution.
• Prohibition of Partial Adherence: The settlement must cover all eligible registrations that are not guaranteed, parcelled, or suspended by judicial decision.
• Deposits Made by the Taxpayer: Any deposits linked to registrations being transacted will be automatically converted into Union revenue, with the remaining amount included in the settlement.