CARF recognizes BNDES as a public authority: a new era for investment subsidies and opportunities under the Real Profit regime

A tax milestone for Real Profit companies

The Administrative Council of Tax Appeals (CARF), through Decision 1202-001.489 – 13136.721103/2021-56, has established an unprecedented interpretation: the subsidized interest on financing granted by BNDES may be treated as investment subsidies, allowing companies to exclude the subsidized portion from the IRPJ and CSLL tax bases.

In practice, the administrative court recognized BNDES as part of the Indirect Public Administration, which places it within the concept of ‘public authority’ established in Article 30 of Law No. 12,973/2014. The ruling highlighted three main arguments:

• Nature of a subsidy: the subsidized interest has the nature of an investment subsidy, in accordance with CPC 07 (Government Grants), as it aims to foster productive activities rather than cover operating expenses.

• Public Authority: the legislation only requires that the subsidy be granted by an entity that forms part of the Public Authority, without imposing any limitation regarding the legal nature of the granting entity (autarchy, foundation, public company, or government-controlled corporation).

• BNDES: as a federal public company, the Brazilian Development Bank (BNDES) is part of the Indirect Public Administration and must therefore be recognized as a public authority for purposes of applying Article 30 of Law No. 12,973/2014.

Thus, CARF ruled out the taxation of these amounts under the Real Profit regime, recognizing that they constitute incentives granted to stimulate investments.

The role of public development banks

The interpretation established by CARF is not limited to BNDES.

It extends to the entire system of public development banks, which share the same legal nature and pursue objectives aligned with long-term public policies for economic and social development.

Brazil has a broad ecosystem of public development banks, including:

• the Brazilian Development Bank (BNDES), with nationwide operations;

• the Northeast Bank (BNB) and the Amazon Bank (BASA), with regional mandates;

• and state development banks, such as BRDE, BDMG, and BANDES.

These institutions form part of the Indirect Public Administration and are tasked with financing long-term economic and social development, assuming risks and promoting strategic sectors such as infrastructure, innovation, and the energy transition.

Therefore, the CARF precedent may have direct implications for subsidized credit transactions granted by these banks, provided that the funds are allocated to investment and productive expansion.

What is at stake: the concept of investment subsidy

Historically, the tax treatment of subsidies has generated uncertainty: state-level incentives, presumed tax credits, and subsidized financing have all received different treatments by the Federal Revenue Service and the courts.

The key turning point lies in the purpose of the benefit: if it aims to expand productive capacity, invest in infrastructure, or foster innovation, it may qualify as an investment subsidy.

CARF’s decision broadens this understanding by including financing with reduced interest rates, provided that there is evidence that the funds are allocated to investments such as industrial plant expansion, asset modernization, or energy transition projects.

The new scenario under Law No. 14,789/2023

Law No. 14,789/2023, in force since January 2024, replaced the previous regime that allowed investment subsidies to be excluded from the Real Profit tax base with a tax credit of 25% on the accounting value of the recognized subsidy.

In practice, the change aims to simplify the use of the benefit, although it requires stricter documentation and a formal authorization process before the Federal Revenue Service.

As a result, tax planning now involves two complementary fronts:

1. Retroactive review (2020–2023): companies with BNDES financing may recover IRPJ and CSLL overpaid on the subsidized interest portion, based on the CARF precedent;

2. Prospective application (2024+): annual accounting recognition of the subsidies and use of the 25% tax credit, in line with the new legislation

Conclusion

CARF’s decision ushers in a new phase in the recognition of investment subsidies in Brazil, strengthening the alignment between accounting and taxation under the lens of legal certainty.

By aligning accounting practices with CPC 07 and the new rules set forth by Law 14,789/2023, companies can enhance tax governance, transparency, and efficiency.

At INFIS Consultoria, we understand that this is the ideal moment to review contracts, tax calculations, and supporting documentation — turning case law into tangible results.

The tax team at INFIS Consultoria is available to assess the eligibility of your financing transactions and identify opportunities for tax recovery and tax credits.