Covid-19 Pandemic and its Legal Impacts in Brazil

We list below the principal measures announced by the Federal Government and governmental agencies as a result of the COVID-19 pandemic.

We recommend that our clients seek legal advice on specific cases. We remain at your disposal for any clarification or guidance that may be necessary.

Civil Aspects

Passengers who decide to postpone their journey are exempt from the contractual penalty if they accept a credit for the purchase of a new ticket within 12 months from the date of the original flight. If they decide to cancel, they are subject to the contractual rules of the ticket already bought. The period for reimbursement of air fares will be 12 months, pursuant to Provisional Decree no. 925/2020.

In the case of cancellation of services, reservations and events, the provider is not obliged to reimburse the consumer, provided he guarantees the availability of a credit for use or deduction on the purchase of other services, reservations or events, or makes another agreement with the consumer, at no additional cost. The credit may be used in the period of 12 months as from termination of the state of public calamity or, if possible, the events should be rescheduled also during his same period, as per Provisional Decree no. 948/2020.

Extension of the date for entry into force of the General Law for Protection of Data (LGPD) until May 3, 2021, pursuant to Provisional Decree no. 959/2020. Note that this decision is not yet final, since the decree still needs to be voted into law.

Law 14.010/2020*

*In force as from June 12, 2020, Law 14.010 is the result of Bill (PL) no. 1.179/2020, which deals with various emergency aspects regarding private legal relations during the pandemic. Many of the articles originally proposed in PL 1179 have been vetoed in the version approved by the President of the Republic.

Deadlines in general: limitation periods are suspended until October 30, 2020.

Consumers: suspended until October 30, 2020 application of art. 49 of Consumer Defense Code (possibility of withdrawing from contract within 7 days from signature or from receipt of the product or service) in event of product or service purchased by home delivery, goods that are perishable or for immediate consumption, and medicines.

Acquisitive prescription: periods for acquisition of real or personal property by the various types of adverse possession are suspended until October 30, 2020.

Alimony: imprisonment for non-payment of alimony may only take the form of house arrest.

Estate proceedings: the period for commencing estate proceedings is extended until October 30, 2020, for successions opened as from February 1, 2020.

General Law for Protection of Data: the starting date for the imposition of sanctions relating to cases of non-compliance with the said Law has been postponed until August 2021.

Bill 675/2020*

*Awaiting final approval by Congress

Prohibition of registration of defaulting debtors in any credit protection service during the state of calamity due to the coronavirus pandemic.

Bill 1.397/2020*

*Awaiting discussion by Congress

Institutes measures of an emergency nature for the prevention of an economic and financial crisis of economic agents; and alters, on a temporary basis, the legal rules relating to judicial and extra-judicial reorganization and bankruptcy.

Among other measures, the Bill proposes, for a period of 30 days, the stay of court actions of an enforcement nature and for review of contracts relating to events of non-compliance occurred after March 20, 2020, relaxation of events giving rise to applications for judicial reorganization, prohibition of bankruptcy adjudications, prevention of unilateral rescission of contracts and cancellation of notices for payment of outstanding fines. In addition, it allows debtors, on compliance with certain requirements, to have recourse to a procedure called preventive renegotiation. The negotiations must take place within not more than 90 days, during which time debtors will enjoy the same protections referred to above against measures taken by their creditors.

Corporate aspects

The deadline for ordinary general meetings and annual partners’ meetings has been extended to seven months as from the end of the fiscal year, this rule being valid only for companies whose fiscal year ends between December 31, 2019 and March 31, 2020, pursuant to Provisional Decree no. 931/2020.

The period of 30 days for submitting corporate documents subject to filing and signed as from February 16, 2020 will start to run from the date on which the Commercial Registries resume their activities, in order to preserve the retroactivity of their effects in relation to third parties from the date of their signature, pursuant to Provisional Decree no. 931/2020. The Commercial Registry of the State of São Paulo (JUCESP) announced the resumption of its activities as from May 12, 2020, to a limited extent and strictly by appointment, in accordance with the preventive COVID-19 anti-contagion measures adopted by the São Paulo State Government.

Shareholders of closed capital corporations and partners of limitadas and cooperatives may participate and vote at a distance in meetings, pursuant to Provisional Decree no. 931/2020. In accordance with Normative Instruction no. 79/2020 of the National Department of Business Registration and Integration (DREI), the meetings of closed capital corporations, limitadas and cooperatives may be held at a distance or online, although the rules for calling and installing meetings and passing resolutions must obey the rules contained in the statutes or articles of association, and the notice of the meeting must state whether the meeting will be held at a distance or online. Open capital corporations already possess such authorization, in accordance with the regulations of the Securities Commission (CVM).

DREI Normative Instruction no. 81/2020 has revoked more than 50 DREI regulations with a view to simplifying and standardizing the instructions relating to the Public Business Registry, concentrating all the material revoked and reformulated in just a single document, and will come into force on July 1, 2020.

General meetings may be held by electronic means until October 30, 2020, irrespective of what may be stated in the company’s statutes, the same provision applying also to Associations, in accordance with article 5 of Law no. 14.010/2020.

Labour aspects

It is permitted to grant collective vacation to employees, by means of obligatory 48 hours’ prior notice to the employees and without the need for prior communication to the Ministry of the Economy or the appropriate trade union, pursuant to Provisional Decree no. 927/2020.

Anticipation of individual vacations is authorized, even if the employee has not completed the minimum reference period, with priority for workers in the COVID-19 risk group, pursuant to Provisional Decree no. 927/2020.

It is permitted to suspend the vacation of employees in the health area or other areas considered essential, pursuant to Provisional Decree no. 927/2020.

It is permitted to bring forward public holidays, by means of at least 48 hours’ prior notice, except for religious holidays, for which a formal agreement with the employee is essential, in accordance with Provisional Decree no. 927/2020.

Teleworking is authorized, including for apprentices and trainees, pursuant to Provisional Decree no. 927/2020.

It is possible to institute an “hour bank” (compensatory time), by means of formal collective negotiation or individual agreement, allowing the compensation of rest for work up to 18 months after the end of the public calamity, pursuant to Provisional Decree no. 927/2020.

Healthcare establishments may enter into an individual agreement in writing to extend the working day, even when the activities are considered insalubrious and when working hours consist of 12 hours’ work for 36 hours’ rest, pursuant to Provisional Decree no. 927/2020.

Except in cases of risk, occupational, clinical and complementary examinations are suspended, except for workers dismissed, pursuant to Provisional Decree no. 927/2020.

Cases of contamination by COVID-19 shall not be treated as a work accident, without proof of a causal link between the illness and the job performed, in accordance with Provisional Decree no. 927/2020.

Companies are now permitted to suspend contracts or reduce the salaries and working day of their employees until the end of the state of public calamity, rather than only for the duration of the original term of the Provisional Decree. Other important changes have also been made, such as the differentiation of the salary parameters for making individual agreements for reduction and suspension, depending on whether the gross earnings of the employer are higher or lower than R$ 4.8 million, and inclusion of retired employees in reduction and suspension agreements with the obligatory payment of a compensation allowance by the employer, of an amount equal to that of the emergency benefit to which the employee would be entitled if he were not retired. The President of the Republic is due to regulate the matter in the next few days, and it is estimated that a further 60 and 30 days may be added to the original periods of suspension and reduction, of 60 and 90 days respectively.

Tax Aspects

Possibility of special transaction on collection of overdue federal tax liability and suspension of deadlines and administrative collection measures, by means of Portarias no. 7.820/2020 (amended by Portaria no. 8.457/2020) and no. 7.821/2020 of the Attorney-General of the National Treasury (PGFN).

Suspension of all procedural deadlines in administrative tax proceedings handled by the Brazilian Federal Revenue until May 29, 2020, through Portaria no. 543/2020 of the Brazilian Federal Revenue (RFB).

Extension of deadline for payment of federal taxes under the Simples Nacional system by means of Resolution no. 152/2020 of the Simples Nacional Management Committee (CGSN).

Reduction to zero of rates of Import Duty on merchandise for medical and hospital use described in Sole Schedule to CAMEX Resolution no. 17/2020 and of the Tax on Industrialized Products until September 30, 2020, pursuant to Decree no. 10.285/2020.

Facilities on the customs clearance of imported medical and hospital products, when intended for the combat against COVID-19, making possible the delivery and use of such products prior to conclusion of the customs check, through Normative Instruction no. 1.927/2020 of the Brazilian Federal Revenue (RFB).

Deferment of payment of FGTS by employers, relating to the months of March, April and May of 2020, as per Provisional Decree no. 927/2020.

Extension until June 30, 2020 of deadline for submission of Income Tax Return for Individuals, as per Normative Instruction no. 930/2020, for submission of Final Declaration of Estate and for Tax Return on Finally Leaving the Country, and any payment of tax assessed, as per Normative Instruction no. 1.934/2020, both of the Federal Revenue of Brazil.

Reduction of contributions to “System S” (contributions of interest to professional categories) for 3 (three) months, pursuant to Provisional Decree no. 932/2020.

Extension of time to pay Employer’s Welfare Contribution (CPP), contribution to PIS/PASEP and COFINS, pursuant to Portaria no. 139/2020 of the Ministry of the Economy.

Postponement of time for submission of DCTF and EFD-Contributions, as per RFB Normative Instruction no. 1.923/2020.

Extension of time for payment of Agroindustry Welfare Contribution, of Funrural and Welfare Contribution on Gross Income, pursuant to Portaria no. 150/2020 of Ministry of the Economy.

Suspension of immigration deadlines as from March 16, 2020, the period starting to run again at the end of the public health emergency situation, with new instructions from the General Coordination of Immigration Police, as per the internal rules of the Federal Police.

Extension of periods for suspension of payment of taxes stipulated in grants of the special “drawback” regime, in accordance with Provisional Decree (MP) no. 960/2020.

Confirmation of possibility of discussing ICMS due on agreed supply of electric energy, according to precedent of Federal Supreme Court (STF).

Possibility of reducing Urban Real Estate Tax (IPTU) on properties with limited use, on application to court.

Possibility of replacing judicial deposits by other assets as security, on application to court.

Alteration of procedures and deadlines for submitting request for application and extinction of special customs regimes, pursuant to Normative Instruction no. 1947/2020 of the Brazilian Federal Revenue Service (RFB).

Reduction to zero of rate of Import Duty on merchandise imported under the Simplified Taxation Regime, pursuant to Portaria no. 194/2020 of the Ministry of the Economy.

Suspension of Provisional Decree (MP) no. 932/2020, which reduced compulsory contributions to the “S System” (contributions of interest to professional categories), according to decision of the Regional Federal Appellate Court of the 1st Region.

Publication by Federal Supreme Court (STF) of new binding precedent regarding the non- existence of an IPI credit on operations involving acquisition of inputs that are exempt, subject to zero rate or not taxable.

Extension of deadlines on instalment payments administered by the Brazilian Federal Revenue (RFB) and Office of the Attorney-General of the National Treasury (PGFN), in accordance with Portaria no. 201/2020 of the Ministry of the Economy.

Extension of deadline for submitting Digital Accounting Records, in accordance with Normative Instruction no. 1950/2020 of the Brazilian Federal Revenue (RFB).

Extension of validity of Certificates of Suspended Tax Liability issued by the State of São Paulo, pursuant to Joint Resolution SFP/PGE no. 02/2020 of the Secretariat of Finance and Planning and the Office of Attorney-General of the State of São Paulo.

Extension of deadline for payment of CPP, PIS and COFINS, due for the month of May 2020, pursuant to Portaria no. 245/2020 of the Ministry of the Economy.

We remain at your disposal for any further explanation/clarification that you may require.

São Paulo, June 29th, 2020.

Adolpho Smith de Vasconcellos Crippa

Patrícia Giacomin Pádua