Anuário Brasileiro do Setor de Locação de Veículos | 2021

146 Anuário Brasileiro do Setor de Locação de Veículos Brazilian Vehicle Rental Sector Yearbook 2021 LEGISLAÇÃO | LEGISLATION Legal rulings that have impacted the sector T he Earth stopped spinning! 2020 has gone down as the year a pandemic created an international emergency, with social distancing, remote work, closed businesses and other measures to prevent contagion and cope with the disease. It sounds unbelievable, but in 2020, COVID-19 was not the most important impact on car leasing and rental companies. In 2020, Brazil’s Supreme Court (STF) opened cases, ruled on or initiated rulings on several specific topics that are relevant to the leasing and rental industry. The pandemic threatened lives and businesses, but generally impacted leasing and rental companies in a similar way to the rest of society. However, the Supreme Court decisions are specific to the leasing and rental sector and will have a lasting impact on the business environment. Road tax - The Supreme Court has ruled on several cases involving Brazil’s road tax (IPVA), which is a direct tax on leasing and rental companies’ assets. In a rapid succession of rulings, some of them somewhat conflicting with each other, the “general repercussion” no. 708 stands out: “The Constitution authorizes the collection of IPVA only by the State in which the taxpayer maintains its registered office or tax domicile.” (STF, RE 1,016,605). General Repercussion 708 is important because several states have enacted laws establishing that IPVA is payable in the place where the vehicle is leased or rented, regardless of whether the tax has been paid in the State where the leasing or rental company’s office is. Companies would be exposed to the risk of multiple IPVA taxation in as many States as their vehicles are driven. Fortunately, after General Repercussion 708, case law declares such multiple tax collections to be unconstitutional and payable only the State where the company’s head office is based. People with disabilities Statute - The Supreme Court also ruled on Direct Action of Unconstitutionality (ADI) 5452 /DF, declaring the requirement to have 5% of a fleet adapted for people with disabilities, established by Law 13,146/2015, art. 52, as valid. However, the discussion in ADI 5452/DF did not involve the possibility of legislation regulating the economic order and imposing social obligations on companies. The leasing and rental industry has never refused to collaborate with social efforts to integrate people with disabilities and this institutional position was clearly presented when ADI 5452/DF was postulated. The debates focused on the proportionality of the 5% requirement and the reasonableness of the law requiring a specific type of adaptation for paraplegic drivers. The Supreme Court declared the law valid but acknowledged that some restrictions should be established. The 5% requirement does not apply indiscriminately to all lease and rental vehicles, only those in the retail market, for rental vehicles. Excluded from this are outsourced fleets, rentals with chauffeurs, public and private tenders, cargo vehicles, motorcycles and others not intended for final consumers. Regarding the minimum features required of adapted vehicles – automatic transmission, power steering, electric windows, and manual brake and clutch controls – the decision was also quite sensible in accepting that the regulation can modify, respecting the spirit of the law, the exact technical specification. The Brazilian Inclusion Law will affect the leasing and rental market in the future, but fortunately the worst did not come to pass and the Supreme Court, in practice, understood that the literal interpretation of the law would not generate satisfactory results or be socially useful. ICMS - In relation to the ICMS tax, the Supreme Court ruled on General Repercussion no. 1012 and said: “ICMS tax on the sale, by a car leasing or rental company, of an automobile that is less than 12 (twelve) months old is constitutional.” The leasing and rental companies buy new, expensive vehicles, incorporate these as fixed assets, use them intensely and then offload them, as used, with high mileage, being less valuable. In accounting and tax language, vehicles are not “commodities,”- that is, they are not goods acquired for the economic purpose of resale at a profit that would trigger ICMS tax. The Supreme Court ruled contrary to the position defended by the leasing and rental companies: it considered it valid that tax law set a “cut-off point” for holding the asset for a minimum of 12 months. Before 12 months, it is assumed that the asset will be a commodity and will trigger ICMS tax; after one year, the presumption is removed and ICMS will not be payable. Traffic - In the Superior Court, the ruling by the Court of Justice in São Paulo was overturned and it voided fines for non-indication of the driver responsible applied without respect to broad and contradictory defense (AREsp 1,659,557/SP). Such traffic fines are traffic fines like others and owners should be guaranteed the opportunity to defend themselves against them. Leasing and rental companies are particularly vulnerable to such fines because of delays in mail-in notifications, delays by public agencies in providing information on drivers, among other reasons they are blameless for. The case is still being considered and will be one of the major legal challenges in the coming years. In ADI 2998 the Supreme Court ruled several articles of the Brazilian Traffic Code, which bind fines for traffic violations committed by drivers to vehicles as constitutional. These norms create solidarity between driver and owner of the vehicle, being a source of various operational problems for companies. The Supreme Court understood that the law can create hypotheses of bonded solidarity. In General Repercussion no. 546, the Supreme Court ruled, “There is a local normative constitutional provision to curb fraud considered public service transport and it is unconstitutional to make release of a vehicle seized conditional on the payment of fines, public prices, and other charges arising from an infringement” (RE 661,702). The problemwith such state and municipal laws applicable to public transportation is they concentrate penalties on vehicles, not transport companies, with seizure and very high fines linked to the vehicles. By Adriano Castro, legal advisor to ABLA and FENALOC