Tax enforcement in Brazil: what a foreign-owned company needs to know

What arrives first

A certidão de dívida ativa (CDA) is the document that legally constitutes the debt; the execution is usually filed within days of its issuance. The company is then served (citação) and, very often in the same period:

• bank accounts are frozen through SISBAJUD, the court system that reaches financial institutions electronically, without prior warning;
• vehicles, real estate and receivables are registered as encumbered;
• the company's name may be included in credit-protection registries and the CDA may be protested.

None of this is final. All of it is time-sensitive.

The two deadlines that decide the case

In practice the two are combined: the first to stop the seizure and raise what is evident, the second once the debt is secured, for the full merits.

What can be argued

• Limitation. The tax authority has five years to collect (art. 174, CTN). When the case stalls for lack of assets, the intercorrente limitation period may apply as well (art. 40, Lei 6.830/1980; Súmula 314/STJ).
• Defects in the CDA — the document must meet the legal requirements of art. 2, §5º, of the Enforcement Law.
• Over-enforcement (excesso de execução): charges above what is due, incorrect penalties, amounts already paid or included in an installment plan.
• Wrong party — common when the collection targets the wrong entity of a group.

Frozen bank accounts

A SISBAJUD freeze is provisional and reversible, but it does not lift on its own. It requires a grounded petition, with evidence. Where the funds are legally protected — payroll, amounts already withheld as tax, savings up to forty minimum wages, restricted funds (art. 833, CPC) — the route is release.

Alternatively, replacing the freeze with another form of guarantee returns working capital more quickly than arguing the freeze itself.

Securing the debt, and what it costs

Defense and guarantee are decided together, because embargos are only admissible after the debt is secured. The options — judicial deposit, bank guarantee, insurance bond, or a lien on assets — have different costs and different impact on cash flow; the choice is made case by case.

The way out: installments and settlement

Not every enforcement action is worth years of litigation. Where the defense is weak, or cash flow does not support the dispute, the law offers:

• parcelamento (installment plan), which suspends the enforceability of the debt (art. 151, VI, CTN) and allows the company to obtain a certidão de regularidade fiscal — often the practical bottleneck for financing, bids and contracts;
• transação (settlement with the tax authorities, Lei 13.988/2020), which may involve discounts, extended terms and the use of tax losses, according to the current notice.

What we ask for in the first review

To give an objective answer, we need: the case number or the CDA; the administrative proceeding that originated the tax, if any; the payment receipts and filings for the period under collection; the list of assets already encumbered; and the company's overall tax position.

The reply states the deadline, whether there is a defense, what security is possible, which scenarios exist and what each one costs.

Working with foreign parents and counsel

The office is based in Humaitá, Rio de Janeiro, and works with companies of all sizes in federal, state and municipal tax enforcement across Brazil. Communication with foreign parent companies and their counsel is in English, Spanish or Portuguese, with a partner responsible for the case.