Since its enactment in 2018 and considering that, since August 1, 2021, companies must apply and comply with the provisions of Law No. 13,709/2018, the Brazilian Data Protection Law (LGPD), to avoid sanctions companies have faced the challenge of adapting to the standards required by the LGPD, including considering the costs of implementing a data protection program.

In line, on July 8, 2021, the Federal Court of Campo Grande, ruled that the expenses with the implementation of the requirements of LGPD proven by the claimants, TNG Comércio de Roupas Ltda. and TB Indústria e Comércio de Confecção de Roupas Ltda., were considered as consumables, in addition to recognizing the right of the claimants to offset the amounts paid in excess with the debts for which they are responsible, after a final decision is rendered.

The justification of the decision to why the costs with the implementation of the requirements of LGPD were recognized as consumables for the purposes of offsetting credits for PIS/COFINS was based on Article 3, II, of Law N. 10,637/2002 and Article 3, II of Law N. 10,833/2003, which determine that from the amount calculated for the contribution to COFINS and PIS, respectively, credits may be deducted by the company in connection with:

“II – goods and services, used as consumables in the provision of services and in the production or manufacture of goods or products intended for sale, including fuels and lubricants, except in relation to the payment referred to in Article 2 of Law N. 10,485, of July 3rd, 2002, owed by the manufacturer or importer, to the concessionaire, for the intermediation or delivery of vehicles classified under headings 87,03 and 87,04 of the TIPI; (…)”

Although neither of the two laws mentioned above defines what can be considered as consumables for benefit of the non-cumulative system of PIS and COFINS, the understanding of jurisprudence to comprehend the definition of consumables was considered. The Superior Court of Justice (STJ), in the Repetitive Special Appeal REsp nº 1,221,170/PR (Themes 779 and 780) stated that the concept of consumables must be verified according to the criteria of essentiality or relevance. In other words, the indispensability and importance of the good or service for the development of the economic activity performed by the company must be considered.

In STJ’s precedent, the term essentiality was defined as “the item on which the product or service depends, intrinsically and fundamentally, constituting a structural and inseparable element of the production process or the execution of the service, or, at the very least, its absence deprives them of quality, quantity and/or sufficiency” and relevance was defined as the –“quality identifiable in the item whose purpose, although not indispensable to the elaboration of the product itself or the provision of the service, is part of the production process, whether due to the singularities of each production chain”.

Therefore, with the acknowledgement of this concept of consumables, the Federal Court of Campo Grande recognized that investment in data protection is mandatory, even considering that sanctions are applied to those who violate the rule. The Court understood that the processing of personal data is not at the discretion of the entrepreneur and that, therefore, the costs are necessary and essential to achieve the commercial objectives.

The investments for compliance are varied, considering, for example, the implementation of systems and processes for identifying failures, creating a communication channel with the data subject, conducting internal training on the subject, hiring employees specialized in data protection, including a Data Protection Officer, among others. All of these costs are essential to avoid potential damage to data subjects, such as data leakage, and full compliance with legislation.

It is noteworthy that, even with the aforementioned case law, it is necessary for companies litigate for recognition of the right to recognize consumables for credit for PIS and COFINS. Currently, the Federal Revenue applies the concept of consumables to a limited extent and it is up to the interested company to prove in court the essentiality and relevance of the expenses.

In sum, although this is the first decision admitting the possibility of credit compensation involving expenses with LGPD, it represents an important precedent, as it recognizes investments with the implementation of the requirements of LGPD as mandatory, which can benefit all those companies that had expenses for the implementation and maintenance of structures for compliance with the LGPD. It is now necessary to wait what will be the understanding of the superior courts on this matter.