Derivative theses and the new tax-reform litigation: what lies ahead

The Brazilian Tax Reform promises to simplify, but the transition opens a new cycle of litigation. On one side, the “derivative theses” — disputes arising from the coexistence of the old and new systems, such as the inclusion of IBS and CBS in the calculation base of ICMS, ISS and IPI. On the other, a dual administrative litigation (CBS at the Federal Revenue Service and CARF; IBS at the Management Committee) and the still-unresolved question of which court judges the new taxes’ disputes. For companies, following and anticipating this tax litigation is part of the preparation — not a separate chapter. This guide maps the fronts already taking shape.

From the “thesis of the century” to the classic derivative theses

The logic behind all of this comes from the “thesis of the century” (RE 574.706, Theme 69, Justice Cármen Lúcia): decided on the merits in 2017 and modulated on 13 May 2021, it held that the ICMS does not make up the PIS/Cofins base because a tax that merely passes through cash is not revenue. The modulation preserved retroactive recovery for those already litigating before 15 March 2017 — which is why, in the derivative theses, the filing date tends to be worth money.

From it the classic derivative theses were born, still without a concluded merits decision:

Scores and docket dates change — it is advisable to check the current status at the STF. While there is no merits decision, the window for preventive filing remains open: those who litigate before judgment preserve retroactive recovery in the event of modulation. One fine distinction often causes confusion: the exclusion of ISS from the base of domestic PIS/Cofins (Theme 118) is still pending — it is not the same as the line on ISS in the base of import PIS/Cofins, which follows its own path.

The reform’s derivative theses

The reform repackages this same logic for the dual VAT, and two disputes already have a clear outline.

1. IBS and CBS in the base of ICMS, ISS and IPI during coexistence. Since the legacy taxes are “inside” (part of their own base) and the new ones are “outside”, the risk is that the new taxes inflate the base of the old ones. The scenario, however, is one of divergence among the States: São Paulo, the Federal District and Pernambuco have already moved to rule out the inclusion in 2026 — the year with no effective collection — shifting the controversy to 2027 onward, when broad coexistence begins. In Congress, Bill PLP 16/2025 seeks to end the doubt by amending the Kandir Law to expressly exclude IBS and CBS from those bases; it is before the Chamber of Deputies (Finance & Taxation and Constitution & Justice committees) and will still depend on the Senate. It is the direct transposition of Theme 69.

2. Tying the credit to effective payment at the previous stage. LC 214/2025 (art. 47, in conjunction with art. 27) ties the IBS and CBS credit to the extinguishment of the tax in the prior transaction. The Constitution (art. 156-A, §5, II), however, only authorizes conditioning the credit on two hypotheses — collection by the acquirer or split payment. Part of the doctrine argues that denying credit for a supplier’s default transfers to the good-faith acquirer a risk the Constitution did not foresee; and that split payment, by creating a new form of extinguishing the tax credit, would clash with the list — held to be exhaustive — of art. 156 of the National Tax Code (CTN). It is the thesis of greatest constitutional density — and is already on the radar of the Office of the Attorney General of the National Treasury (PGFN).

Administrative litigation on two tracks

LC 227/2026 designed a dual litigation. The CBS, being federal, remains at the Federal Revenue Service, under Decree 70.235/1972 and CARF. The IBS, of shared competence, gains its own litigation at the Management Committee, in three instances — 27 Judgment Chambers at the base, parity Appeal Chambers and a Superior Chamber for unification —, with a summary rite for smaller cases and 16 principles set out in art. 55. To stitch the two tracks together, a National Integration Chamber was created (four members from CARF, four from the Management Committee, four from taxpayers and one chair), tasked with harmonizing the interpretation of common legislation, with a special appeal within 10 days on divergence.

The design is elegant on paper, but carries concrete risks:

• Divergent decisions between CARF and the Management Committee on identical rules, until the National Integration Chamber consolidates an understanding.
• Hybrid deadlines — some counted in business days, others in calendar days —, a confusion that already led the Revenue Service to issue an interpretive act to organize the count.
• Dual competence in transactions involving both IBS and CBS, requiring a coordinated procedural strategy in both spheres.

For companies, this means redoubled attention to deadlines and defense strategy throughout the transition — a counting error can cost the dispute itself.

And in court, who judges?

The question has no answer yet. Since the CBS is federal and the IBS is state/municipal, the same transaction may produce divergent decisions in the Federal and State courts, and the destination principle creates disputes with several entities at once. The Supreme Court opened the institutional debate at the end of 2025 and, through its Center for Constitutional Studies (CESTF), launched a public consultation in 2026 to discuss solutions — from a specialized national jurisdictional forum to a “single litigant”, along with an expanded IRDR and the Management Committee itself as procedural substitute in IBS claims. In parallel, the PGFN set up a “thesis incubator” to anticipate defenses. These are signs that the system is bracing for a relevant volume of litigation — despite the simplification narrative.

The reform’s ADIs and the date that matters

Litigation over the reform itself has already reached the STF, and the calendar has a near-term milestone:

The ADIs 7779 and 7790 (Justice Alexandre de Moraes) challenge LC 214/2025’s restriction on the zero rate of IBS/CBS for the purchase of vehicles by persons with disabilities and autism-spectrum disorder; it is the first merits action against LC 214 and a thermometer of how the Court will treat the new system’s exceptions. In parallel, there are ADIs on the taxation of profits and dividends (Law 15.270/2025) and on restrictions to ICMS benefits (LC 224/2025), still without a merits decision.

Preventive filing: why the date matters

In tax theses, the moment of disputing often matters as much as the merits. When the STF or the STJ set a taxpayer-favorable understanding, they frequently modulate the effects — limiting the refund of undue amounts to those already disputing up to a given date (as a rule, the start of judgment). In practice, those who file earlier preserve retroactive recovery; those who wait for the outcome tend to benefit only going forward. That is why mapping the company’s exposure to open theses — classic and reform — and deciding what (and when) to file is an analysis of opportunity and risk made before judgment. It is also what links litigation to credit recovery: the thesis is won in court, but the value is realized in recovery.

How TaxUp acts

The TaxUp team follows the reform’s litigation in real time and translates each move into a practical decision for the client: assessing the preventive filing of theses still open, mapping the company’s exposure to the transition’s disputes and preparing the defense for the new dual litigation — including the appeal to the higher courts when needed. Anticipating is, here, the difference between capturing a thesis at the right time and losing it.

Frequently asked questions

Sources: STF — RE 574.706 (Theme 69, “thesis of the century”); RE 592.616 (Theme 118); RE 835.818 (Theme 843); RE 1.233.096 (Theme 1067); ADIs 7779/7790 (Justice Alexandre de Moraes); LC 214/2025 and LC 227/2026 (Planalto); Bill PLP 16/2025 (Chamber of Deputies); statements by Sefaz-SP, the Federal District and Pernambuco on the ICMS base in 2026; STF/CESTF — public consultation on the forum (Notice 5/2026); PGFN — “thesis incubator”. Scores, dates and case progress change and should be checked at the court. Informational content, updated June 2026 — it does not replace an individualized analysis of each case.