Is it possible to waive the ICMS, PIS, and Cofins taxes in shared generation?

The consolidation of shared generation within the scope of distributed microgeneration and minigeneration has reopened, on new grounds, the debate on the incidence of ICMS, PIS and COFINS taxes in the Brazilian electricity sector.

The legal issue is not limited to identifying any potential tax benefit, but involves the correct classification of the taxable event applicable to operations structured under the SCEE (Electric Energy Compensation System).

In such arrangements, the energy generated by a unit that is part of the collective structure is injected into the distributor's grid and subsequently offset in favor of consumer units linked to the same organizational model, such as cooperatives, associations, consortia, condominiums, or EMUCs (Multi-Unit Consumer Units).

Within this dynamic, the traditional taxation of merchandise circulation and revenue reveals tensions with the regulatory reality of compensation, allocation, and shared cost-sharing.

This article argues that the controversy should be broken down into four distinct analytical levels:

• (i) the incidence — or non-incidence — of ICMS on compensated energy in the context of shared generation;
• (ii) the application of the exemption regime authorized by ICMS Agreement 16/2015 and its subsequent extensions;
• (iii) the exclusion of ICMS from the calculation basis of PIS and COFINS, in accordance with Topic 69 of the Federal Supreme Court; and
• (iv) the non-incidence of these contributions on typical cooperative acts or, in non-cooperative structures, on income that does not constitute own revenue or taxable turnover.

Based on the governing legislation, precedents from higher courts, and judicial decisions, it is demonstrated that a correct understanding of the subject requires conceptual rigor: not all tax relief is exemption; not all absence of collection stems from a tax benefit; and not all financial income received by associations, cooperatives, consortia, condominiums, or EMUC represents taxable revenue.

The expansion of distributed generation in Brazil has brought about not only a technological and economic transformation, but also a dogmatic reorganization of the tax categories applied to the electricity sector.

The enactment of Law 14.300/2022 gave legal substance to the Electric Energy Compensation System and consolidated forms of collective generation organization, including shared generation, in which consumers come together through cooperatives, consortia, associations, condominiums, EMUC or other structures permitted by the sector regime.

This regulatory framework, however, did not eliminate tax controversies. On the contrary, the maturation of shared generation revealed a tension between, on the one hand, the legal form of the regulated electricity system — centered on compensation, energy credits, and internal benefit sharing — and, on the other hand, the revenue-collecting tendency to classify such operations within the classic categories of commercial circulation and gross revenue.

The practical consequence is the judicialization of the application of ICMS/PIS/COFINS taxes on energy offset from these shared generation models.

To implement the sharing of electricity through shared generation, consortia, cooperatives, associations, condominiums and EMUCs are subject to the provisions of Normative Resolution No. 1.000/2021 [1], of the National Electric Energy Agency – ANEEL, which “Establishes the Rules for the Provision of the Public Electricity Distribution Service; revokes the Normative Resolutions ANEEL No. 414, of September 9, 2010; No. 470, of December 13, 2011; No. 901, of December 8, 2020, and provides other measures.”

In various cases, the Judiciary has been called upon to answer whether the transfer/sharing of energy between the organizing entity and its associates, cooperative members, or consortium members constitutes a market operation; whether the compensated energy can be taxed as if it were a sale of goods; whether ICMS (a Brazilian state tax) can be included in the base for PIS and COFINS (federal social security contributions); and whether the financial income corresponding to the cost of shared generation translates to own revenue or mere reimbursement.

The response found in recent decisions is, broadly speaking, favorable to the taxpayers' argument.

The central problem addressed in this article, therefore, is the following: is it possible to waive the collection of ICMS, PIS, and COFINS taxes in shared energy generation?

The hypothesis being put forward is that there is not a single answer, but four legally autonomous answers:

1. In certain circumstances, ICMS exemption is authorized by agreement or specific state law;
2. In other cases, there is no material incidence of ICMS/PIS/COFINS due to the absence of onerous legal transactions;
3. Regarding PIS/COFINS, ICMS is excluded from the tax base, pursuant to Supreme Court Ruling 69;
4. Regarding internal allocation/distribution, there may be no tax due to the absence of revenue/turnover, especially in cooperatives, due to the typical cooperative act, and in associations and consortia, due to the nature of mere reimbursement/common cost.

Although the debate may appear, at first glance, to be a matter of tax classification, its repercussions go beyond the purely revenue-raising aspect.

What is at stake is the legal security of the agents who structure and finance these ventures, the economic viability of projects developed under the logic of distributed generation, the competitiveness of the shared generation model as an instrument for expanding access to energy, and also the coherence between tax law and the regulation of the electricity sector.

In other words, discussing the taxation of shared generation is also discussing the limits of fiscal action in the face of a regulatory arrangement designed to promote efficiency, decentralization, and democratization of the energy sector.

Shared generation and the legal nature of SCEE

Law 14.300/2022 defines the Electric Energy Compensation System as the system in which active energy is injected by a consumer unit with distributed microgeneration or minigeneration into the local distributor's network, provided as a free loan and subsequently offset against the consumption of active electrical energy or accounted for as an energy credit.

This legal expression — "free loan" — has enormous dogmatic relevance because it eliminates, at least in its original normative formulation, the idea of ​​the onerous alienation of energy to the distributor or to third parties.

This normative element is crucial to the tax debate. If the legal framework for distributed generation itself recognizes that energy is injected into the grid as a free loan, for later compensation, the application of ICMS/PIS/COFINS cannot be presumed simply because there is physical transit of energy through the distributor's infrastructure.

The taxable event for ICMS (Tax on the Circulation of Goods and Services) on the circulation of goods is not perfected by the mere physical movement of the goods; it requires, according to its constitutional and jurisprudential tradition, an economic-legal content of circulation, with a transfer of ownership or with the insertion of the transaction into the consumer market.

The energy produced in the context of shared generation is not "sold" to the members of the collective structure; it is injected, accounted for, distributed, and appropriated as credit, while the amounts paid by the participants generally serve to support the cost of generation and maintenance of the model.

The sector's own regulations already describe the operation in terms incompatible with classic commercial transactions.

The first methodological error: treating the entire controversy as "neutral."

In practical market discourse, it has become common to say that there is "exemption from ICMS/PIS and COFINS in shared generation." The expression is commercially useful, but technically inaccurate.

Exemption is a legally granted tax benefit, presupposing pre-existing tax jurisdiction and possible abstract incidence. Non-incidence is a situation in which the specific case does not fit the tax's basic rule.

Exclusion from the tax base, in turn, is a technique for delimiting the quantitative aspect of the tax incidence, without necessarily denying the existence of the tax in the abstract.

In the case under examination, the three institutions coexist:

Duties exemption assistance

Granted through the CONFAZ ICMS Agreement 16/2015 [2] which authorizes the States to grant ICMS exemption on electricity supplied by the distributor to the consumer unit, in the amount corresponding to the energy injected into the grid and the credits appropriable under the terms of the SCEE, applicable for local self-consumption and remote self-consumption for plants up to 1 MW, to which the states of the federation adhered, some granting exemption on TE + TUSD and others only on TE and through some state laws, such as the states of Minas Gerais, São Paulo, Rio de Janeiro and Espírito Santo which granted ICMS exemption for local self-consumption, remote self-consumption and shared generation of plants up to 5 MW;

Exclusion from the calculation base

As foreseen in Supreme Court Ruling 69, which recognizes the exclusion of ICMS (a Brazilian state sales tax) from the calculation basis of PIS and COFINS (Brazilian federal social security contributions).

Non-occurrence

The argument for the non-commercialization of energy in distributed generation, which in turn refers to the non-incidence of tax liability, is based either on the absence of commercial legal transactions or on the absence of taxable revenue or turnover.

In short, treating the entire shared generation controversy under the indistinct label of "exemption" means impoverishing legal analysis and erasing fundamental dogmatic distinctions.

The matter, in truth, is composed of diverse regimes that should not be confused: there is exemption, when the state regulation, authorized by agreement, exempts the operation; there is exclusion from the tax base, when the system prevents values ​​unrelated to own revenue from being included in the incidence of PIS and COFINS; and there is non-incidence, when the concrete hypothesis itself does not fulfill the constitutional materiality of the tax.

Conceptual precision, therefore, plays a role not merely in terminology, but in a structuring one: it is what allows us to correctly identify the nature of each thesis, delimit its foundations, and prevent the tax complexity of shared generation from being reduced to a simplifying formula incompatible with the sophistication of the problem.

ICMS in shared generation: from the exemption authorized by Confaz to the thesis of non-incidence of material tax.

It is important to point out initially that ICMS is a state tax, therefore, each state will regulate it through its own state laws.

The CONFAZ ICMS Agreement 16/2015 [3] authorized the States to grant ICMS exemption on electricity supplied by the distributor to the consumer unit, in the amount corresponding to the sum of the energy injected into the grid with the active energy credits generated in the consumer unit itself or in another unit of the same owner.

This system is relevant, but it doesn't fully resolve the reality of distributed generation in Brazil. This is because when we talk about distributed generation, we are faced with three types/possibilities:

Local self-consumption: this refers to the scenario where energy generation and consumption occur within the same consumer unit, meaning the generating plant is installed at the very location where the energy will be compensated. In this modality, there is a coincidence between the unit that injects energy into the grid and the unit that directly benefits from the corresponding credits, revealing the simplest and most linear form of distributed generation;

Remote self-consumption: This modality is characterized by consumer units owned by the same legal entity — including parent company and branches — or by the same individual who owns a consumer unit with distributed microgeneration or minigeneration in a location different from the consumption units, provided that all are within the same concession or permit area. Here, although generation and consumption occur in different locations, the ownership remains the same between the generating unit and the units benefiting from the energy credits;

Shared generation: This is a modality in which consumers come together, for example, through a cooperative, consortium, or other form of organization permitted by legislation and sector regulations, to share energy credits originating from a microgeneration or distributed minigeneration unit. Unlike remote self-consumption, here there is not necessarily individual identity between the generation owner and each beneficiary consumer unit, but rather a collective structure aimed at the common use of the generated energy.

The CONFAZ ICMS Agreement 16/2015 [4] authorized states to grant exemptions to ICMS levied on local self-consumption and remote self-consumption, but did not include in its text an exemption for shared energy generation.

Let's look at the text of the agreement:

Clause One: The States of Acre, Alagoas, Amapá, Amazonas, Bahia, Ceará, Espírito Santo, Goiás, Maranhão, Mato Grosso, Mato Grosso do Sul, Minas Gerais, Pará, Paraíba, Paraná, Pernambuco, Piauí, Rio de Janeiro, Rio Grande do Norte, Rio Grande do Sul, Rondônia, Roraima, Santa Catarina, São Paulo, Sergipe, Tocantins, and the Federal District are authorized to grant exemption from ICMS (Tax on Circulation of Goods and Services) levied on electricity supplied by the distributor to the consumer unit, in the amount corresponding to the sum of the electricity injected into the distribution network by the same consumer unit with the active energy credits originating in the consumer unit itself in the same month, in previous months, or in another consumer unit of the same owner, under the terms of the Electricity Compensation System, established by Normative Resolution No. 482, of April 17, 2012.

• 1. The benefit stipulated in the heading:

I – applies only to the compensation of electrical energy produced by microgeneration and minigeneration defined in the aforementioned resolution, whose installed power is, respectively, less than or equal to 75 kW and greater than 75 kW and less than or equal to 1 MW;

II – This does not apply to availability costs, reactive power, power demand, connection charges or use of the distribution system, and any other charges levied by the distributor.

• 2. The reversal of the tax credit provided for in Article 21 of Supplementary Law No. 87, of September 13, 1996, will not be required.
• 3rd Repealed

[...]

Some states in the Federation have expanded the exemption benefit through their own laws, for example:

• State of Minas Gerais: where the ICMS exemption applicable to distributed solar photovoltaic generation is based on art. 48 of State Law No. 22.549/2017 [5] (which amended art. 8-C of Law No. 6.763, of December 26, 1975), subsequently extended until 2032, in its infralegal discipline, by Decree No. 48.506/2022 [6], covering plants of up to 5 MW, and also including the shared generation modality;
• State of São Paulo: where the ICMS exemption applicable to distributed generation is provided for in RICMS/2000, ANNEX I, art. 166, § 1-A [7] (introduced by Decree No. 61.439/2015), which now expressly provides that consumers classified, among other categories, as “consumer unit characterized as shared generation”, as well as multiple consumer units and remote self-consumption, may adhere to the benefit;
• State of Rio de Janeiro: the ICMS exemption applicable to compensated electricity within the scope of distributed generation is based on State Law No. 8.922/2020 [8], whose art. 2, II, expressly contemplates the consumer unit characterized as shared generation. The SEFAZ/RJ opinion itself indicates that ICMS Agreement 16/2015 was incorporated into Rio de Janeiro legislation by SEFAZ Resolution No. 969/2016, but highlights that Law No. 8.922/2020 is the state regulation that structured the benefit in its current form and included shared generation, remote self-consumption and multi-unit consumer enterprises in the exemption benefit;
• State of Espirito Santo: the ICMS exemption applicable to electricity compensation within the scope of distributed generation is based on State Law No. 7.000/2001 [9], especially in its art. 5-D, whose legislative history has expressly contemplated the consumer unit characterized as shared generation;
• Pernambuco: SEFAZ/PE itself, in response to consultation 03/2025 [10], states that the exemption currently provided for in art. 396, III, of Decree No. 44.650/2017 (RICMS/PE) [11] is applicable to microgeneration or minigeneration units characterized as remote self-consumption or shared generation, as well as the application of ICMS Agreement 16/2015 to shared generation;
• Mato Grosso: SEFAZ/MT records, in response to consultation 131/2021 [12], that article 37 of the state legislation on benefits now provides for exemption for operations subject to billing under the SCEE and that the benefit covers cases such as “multi-unit consumer enterprise” and “shared generation”.

Therefore, the incorporation of the exemption provided for in ICMS Agreement 16/2015 did not occur uniformly among the States. In some federative entities, legislation or administrative interpretation began to expressly contemplate shared generation; in others, the benefit remained associated with more restricted cases, such as local or remote self-consumption.

ICMS (a Brazilian tax) applies to transactions related to the circulation of goods. The core of this rule is not the mere physical existence of energy, but the legal transaction that allows it to circulate in the market.

It is precisely this dimension that the lawsuits seek to eliminate by arguing that, in shared generation, there is no buying and selling of energy, no commercial activity, no profit margin for resale, or onerous transfer of ownership.

In various court decisions across Brazil, the judiciary has recognized that the energy distributed in the context of shared generation does not, in principle, have a typical commercial nature, which authorizes the suspension of the ICMS tax requirement.

Shared generation challenges the automatic interpretation of the electricity sector as a chain of commercial circulation. The transit of energy through the distribution network does not, in itself, convert regulated compensation into a purchase and sale operation. The use of the network is instrumental; the legal nature of the operation continues to be defined by the legal and associative arrangement that gives rise to it.

PIS and COFINS: Supreme Court Case 69 and the impossibility of taxing someone else's wealth.

In the field of PIS and COFINS, the first area of ​​focus lies in the distinction between taxation on revenue/turnover and taxation of income that does not definitively become part of the taxpayer's assets.

The Brazilian Supreme Federal Court, in judging RE 574.706 (Topic 69), established the precedent that ICMS (a Brazilian state sales tax) does not form part of the tax base for the calculation of PIS and COFINS (federal social security contributions). The ratio decidendi is well-known: ICMS does not constitute revenue or income of the taxpayer, but rather income destined for the state tax authorities.

Including ICMS (a Brazilian state sales tax) in the calculation base for PIS/COFINS (Brazilian federal social security contributions) artificially distorts the concept of revenue and, in practice, results in taxation on someone else's wealth.

The central basis of the precedent rests on the recognition that ICMS (a Brazilian state sales tax), although recorded in tax records and included in the value shown on the transaction, does not constitute the taxpayer's own revenue or income, but rather an amount destined for the state tax authorities.

In other words, this is value that enters the taxpayer's accounting sphere only temporarily, without being permanently incorporated into their assets.

The dogmatic relevance of this ruling goes beyond the mere quantitative exclusion of ICMS (Brazilian state sales tax) from the tax base for contributions.

What the Supreme Court effectively reaffirmed was a material limit to taxation: the concept of revenue cannot be artificially distorted to include, in the PIS and COFINS tax base, values ​​that do not reflect one's own wealth. When this occurs, there is a distortion of the constitutional materiality of these contributions and, in practice, taxation on the wealth of others.

From this perspective, including ICMS (a Brazilian state sales tax) in the calculation base for PIS and COFINS (federal social security contributions) creates a distortion incompatible with the constitutional design of the tax system. The taxpayer does not receive, as revenue, the portion corresponding to the ICMS; they only collect it and pass it on to the State.

Taxing this amount as if it were part of the revenue means artificially expanding the tax base for social security contributions and subjecting to taxation a value that, legally, does not belong to it. This is precisely why the Supreme Federal Court (STF) ruled that the ICMS (Brazilian state sales tax) shown on invoices is not included in the tax base for these levies.

This construction is especially important in the context of shared generation because it demonstrates that the incidence of PIS and COFINS cannot be presumed on any value that passes through the economic structure of the arrangement.

Just as ICMS (a Brazilian sales tax) cannot be treated as own revenue because it constitutes the wealth of a third party, similarly, income that appears to be merely a transfer, allocation, or reimbursement must be examined carefully in light of its actual suitability—or lack thereof—to represent taxable income.

Topic 69, therefore, not only resolves the controversy regarding ICMS (Brazilian state sales tax) in the PIS/COFINS (Brazilian federal social security contributions) base, but also offers an important hermeneutical key for the analysis of other financial income within the scope of shared generation.

But this issue has been superseded following the Supreme Federal Court's decision on case 69, which became known as the "Thesis of the Century."

The most sophisticated aspect of the topic: do revenues from shared generation constitute taxable income?

The most relevant debate is not only whether ICMS (a Brazilian state tax) applies to compensated energy, but whether the amounts paid by associates, cooperative members, or consortium members to the entity that organizes shared generation represent their own revenue, turnover, or simply cost reimbursement/sharing?

In cooperatives, the foundation is more solid and traditional. Law 5.764/1971 [13], in its art. 79, defines a cooperative act as one carried out between a cooperative and its members for the achievement of social objectives and establishes that this act does not imply a market operation, nor a contract for the purchase and sale of a product or merchandise.

Based on this, the Superior Court of Justice (STJ) established Ruling 363, according to which PIS/COFINS (social security contributions) do not apply to typical cooperative acts carried out by cooperatives. The attached decisions reproduce this guidance and make it clear that the understanding applies only to typical cooperative acts, not encompassing operations with third parties or activities of a clearly commercial nature.

It is important to point out that, although the Superior Court of Justice (STJ) has consolidated the non-incidence of PIS/COFINS on typical cooperative acts in Topic 363, it remains relevant to note the existence of Topic 536 of the Supreme Federal Court (STF), which recommends methodological prudence when asserting absolute pacification of the matter at the constitutional level.

In several legal proceedings, the decisions expressly recognize the right to exclude from the calculation base of PIS and COFINS both the ICMS (state sales tax) shown on invoices and the typical cooperative act consisting of supplying electricity to cooperative members, with restitution of amounts unduly paid.

The argument is that the values ​​perceived by cooperatives in the internal supply of energy – through shared generation – constitute mere reimbursements, since they do not have a commercial character and do not increase the entity's assets as new wealth.

This is the dogmatic core of the thesis. The problem is not merely "sectoral," but is linked to the tax concept of revenue. Not all financial inflow is revenue. Only that which definitively enters the taxpayer's assets as a new, positive, and inherent element is considered revenue.

If the entity merely organizes the generation, receives funds for common expenses, and internally distributes the energy benefits to its members, there is serious grounds to argue that these revenues do not constitute taxable income.

Cooperatives, associations, and consortia: is the thesis the same? Not exactly.

In cooperatives, the thesis is reinforced by the constitutional and legal regime of cooperativism, by article 79 of Law 5.764/1971 [14] and by STJ Theme 363 [15]. In them, the vocabulary of “typical cooperative act” is technically specific.

In civil associations, consortia, condominiums, or EMUC (Municipal Urbanization Company), the situation is more delicate. The association is not a cooperative, and the automatic use of the label "cooperative act" can create theoretical weakness in the argument.

The best defense argument here is to state that:

1. The association does not act as an energy trader;
2. The amounts received are related to the sharing/cost of the common activity;
3. Internal transfers are not considered sales to third parties;
4. Ticket sales do not qualify as own commercial revenue.

This refinement is valuable because it avoids a likely criticism from the tax authorities: that the taxpayer would be improperly attempting to import the tax regime of cooperatives into distinct corporate or contractual structures.

Law 13.169/2015 and the tax-relieving rationality of the federal legislator.

Law 13.169/2015 [16], in its article 8, reduced to zero the PIS/Pasep and COFINS rates applicable to active electrical energy supplied by the distributor to the consumer unit, in the amount corresponding to the sum of the active energy injected into the network by the same consumer unit with the active energy credits originating in the consumer unit itself or in another unit of the same owner, within the scope of the electricity compensation system:

Article 8. The rates of the Contribution to the PIS/Pasep and the Contribution to the Financing of Social Security – COFINS levied on active electrical energy supplied by the distributor to the consumer unit are reduced to zero, in the amount corresponding to the sum of the active electrical energy injected into the distribution network by the same consumer unit with the active energy credits originating in the consumer unit itself in the same month, in previous months or in another consumer unit of the same owner, under the terms of the Electric Energy Compensation System for microgeneration and distributed minigeneration, as regulated by the National Electric Energy Agency – ANEEL.

This provision reinforces the system's coherence, namely, the federal legislator recognized that energy compensated in the context of micro and mini-distributed generation should not, at least in the legally foreseen cases, be subject to the ordinary incidence of these contributions as if it were entirely new consumption acquired on the market.

However, the legal provision is limited to granting exemption from PIS/COFINS taxes on local self-consumption and remote self-consumption for power plants up to 5 MW linked to the SCEE – Electric Energy Compensation System, excluding Shared Generation from the legal provision.

However, the regulatory provision serves as a legislative indication of coherence: if the legislator himself exempted compensated energy in certain scenarios – local self-consumption and remote self-consumption – an interpretation that treats the phenomenon of compensation as if it were a purely autonomous commercial acquisition, or worse, as if each stage of the arrangement generated new taxable revenue, becomes even less sustainable.

Recent case law and the movement to consolidate the thesis.

Analysis of recent case law reveals that the Judiciary is gradually assimilating the need to reinterpret the taxation applicable to shared energy generation in light of its own regulatory framework.

Although it is not yet possible to speak of a complete pacification of the matter in all its aspects, there is already a consistent movement of recognition that shared generation does not fit, without mediation, into the classic tax categories of commerce and revenue.

In particular, the most recent rulings have shown greater sensitivity in distinguishing regulated energy compensation from a typical commercial transaction, as well as in excluding the application of social security contributions to income that does not qualify as own revenue.

ICMS

With regard to ICMS (Brazilian state sales tax), recent precedents point to a strengthening of the understanding that electricity distributed through shared generation within the context of the Electricity Compensation System does not, in principle, constitute a commercial transaction that would trigger the tax.

The main point of the decisions is the finding that the transit of energy through the distribution network, by itself, is not sufficient to characterize taxable legal circulation, especially when there is no purchase and sale of energy, profitable resale, or onerous transfer of ownership between the participants in the collective structure.

Let's look at some decisions:

CONSTITUTIONAL, TAX AND CIVIL PROCEDURE LAW – CIVIL APPEAL – WRIT OF MANDAMUS – TAX ON THE CIRCULATION OF GOODS AND SERVICES (ICMS) – ELECTRIC ENERGY – SELF-GENERATION – CONSORTIUM – TAXABLE EVENT – NON-OCCURRENCE – COMPENSATION SYSTEM – GRANTING OF THE WRIT OF MANDAMUS – APPEAL NOT GRANTED – JUDGMENT UPHELD. – The regime of Federal Law No. 14.300/2022, regulated by the Normative Resolution of ANEEL Decree No. 482/2012 and subsequent regulatory frameworks provide for distributed generation of electricity, under the assumption of the existence of a compensation system, in which the energy exceeding that produced for self-consumption by the members of the Consortium is transmitted to the local distributor – In turn, the Distributor transfers, under the compensation system, the electricity to the members of the Consortium and only proceeds with the effective circulation of the commodity, for the purposes of ICMS (State VAT) incidence, of that which exceeds what was produced by the consortium members and is effectively acquired by them for consumption. (TJ-MG – Civil Appeal: 52577969620228130024, Rapporteur: Judge Márcio Idalmo Santos Miranda, Judgment Date: 09/17/2024, Civil Chambers / 1st CIVIL CHAMBER, Publication Date: 09/18/2024)

APPEAL AGAINST INTERLOCUTORY DECISION. ICMS (Value-Added Tax). TAX LAW. ACTION FOR DECLARATION OF NON-EXISTENCE OF A LEGAL RELATIONSHIP COMBINED WITH A REQUEST FOR URGENT RELIEF. PRELIMINARY INJUNCTION DENIED. ELECTRIC ENERGY COMPENSATION SYSTEM (SCEE). REVERSAL OF THE APPEALED DECISION. ABSENCE OF GOODS CIRCULATION OPERATION. EXEMPTION REQUEST REGULATED BY LAW NO. 19.595/2018. APPLICATION TO THE CASE OF THE CONCEPT OF MICRO AND MINI-GENERATOR, ACCORDING TO THE HYPOTHESIS OF SHARED GENERATION DEFINED IN NORMATIVE RESOLUTION NO. 482/2012 OF THE ANEEL, IN ITS ART. 2, INC. VII AND APPLICATION OF THE CONCEPT OF COOPERATIVE ACTS PROVIDED FOR IN ART. 79, SOLE PARAGRAPH, OF LAW NO. 5.764/71, WHICH DEFINES THE NATIONAL POLICY ON COOPERATIVISM AND ESTABLISHES THE LEGAL REGIME OF COOPERATIVE SOCIETIES. NON-COMMERCIAL NATURE. NON-INCIDENCE OF ICMS. EXEMPTION GRANTED. APPEAL ALLOWED. (TJ-PR 00510654720228160000 Curitiba, Rapporteur: substitute Fernando Cesar Zeni, Judgment Date: 06/27/2023, 1st Civil Chamber, Publication Date: 07/06/2023).

We cite the court decision in case number 0000554-85.2025.8.16.0179 from the state of Paraná, which granted the preliminary injunction:

Therefore, I PARTIALLY GRANT the preliminary injunction in order to suspend the collection of ICMS (Value Added Tax) on the acts of transferring electricity costs carried out with its associates, regarding the sharing of electricity costs under the compensation system.

Therefore:

III) Issue an urgent summons, or other effective electronic means if applicable, to the defendant to comply with the preliminary injunction as granted, demonstrating compliance in the case file.

At the same time, you must be summoned to present your response within the legal timeframe, observing the provisions of articles 183 and 335 of the Brazilian Code of Civil Procedure (CPC/2015), and the summons must include the legal warnings.

The hypothesis of not holding a conciliation or mediation hearing, with self-composition not being permitted, stems from the unavailability of the Public Treasury's right (article 334, §4, II, of the CPC).

1. IV) To comply with this decision, Copel Distribuição S/A should also be notified. […]

We also cite the court decision in case number 5054656-30.2025.8.24.0023 from the state of Santa Catarina, which granted the preliminary injunction:

In light of the foregoing, I GRANT the request for provisional relief to order the defendant to suspend the collection of ICMS (Value Added Tax) on the acts of transferring electricity costs carried out with its associates, regarding the sharing of electricity costs and the performance of other duties within its corporate purpose.

We also cite the court decision in case number 5078102-78.2026.8.21.0001 from the state of Rio Grande do Sul, which granted the preliminary injunction:

Therefore, granting the preliminary injunction is deemed feasible, so as to suspend the enforceability of the tax until the merits of this lawsuit are judged.

In light of the foregoing, I GRANT the request for provisional relief to suspend the enforceability of the ICMS tax levied on the sale of electricity in relation to the operations carried out by [xxxx], concerning the units currently associated with the Electricity Compensation System (SCEE), as provided for in the Normative Resolution. ANEEL No. 482/12, revoked by Normative Resolution ANEEL Decree No. 1.059, of February 07, 2023, determining that the Tax Authorities shall not resort to coercive means to demand the tax.

PIS and COFINS

Regarding PIS and COFINS, the collected rulings indicate the consolidation of an equally relevant argumentative basis, especially with respect to the non-incidence of these contributions on typical cooperative acts and, by argumentative extension, on income that does not represent own revenue or taxable turnover in the context of shared generation.

Here are some court rulings that support the exclusion of PIS/COFINS taxes on shared energy generation:

TAX LAW. SPECIAL APPEAL. NON-INCIDENCE OF PIS AND COFINS ON TYPICAL COOPERATIVE ACTS. APPLICATION OF THE PROCEDURE OF ART. 543-C OF THE CPC AND RESOLUTION 8/2008 OF THE STJ. SPECIAL APPEAL DISMISSED. 1. Special Appeals 599.362 and 598.085 dealt with the hypothesis of incidence of PIS/COFINS on acts (legal transactions) carried out with third-party service recipients; therefore, they are not strictly related to the matter discussed in these proceedings, which dealt with typical acts carried out by cooperatives. Similarly, Special Appeals 672.215 and 597.315, with general repercussion but without a judgment on the merits, deal with a different hypothesis from that of these proceedings. 2. Art. Article 79 of Law 5.764/71 stipulates that cooperative acts are those practiced between cooperatives and their members, between members and cooperatives, and by cooperatives among themselves when associated, for the achievement of social objectives. Furthermore, its sole paragraph warns that a cooperative act does not imply a market operation, nor a contract for the purchase and sale of a product or merchandise. 3. In the case at hand, it is clear from the decision under analysis that it is a typical cooperative act, promoted by a cooperative that carries out operations between its own members (p. 126), thus authorizing the non-incidence of contributions destined for PIS and COFINS. 4. The opinion of the learned Federal Public Prosecutor's Office is for the dismissal of the Special Appeal. 5. Special Appeal dismissed. 6. Judgment submitted to the regime of art. 543-C of the CPC and STJ Resolution 8/2008, establishing the following thesis: the contribution destined for PIS/COFINS does not apply to typical cooperative acts carried out by cooperatives. (REsp No. 1.164.716/MG, First Section, judged on 4/27/2016, DJe of 5/4/2016.)

TAX LAW. PIS AND COFINS. AGRO-INDUSTRIAL PRODUCTION COOPERATIVES. TYPICAL OR PROPER ACTS. NON-INCIDENCE. RIGHT TO USE CREDITS. ART. 17 OF LAW 11.033/04 AND ART. 16 OF LAW 11.116/05. NOT CONFIGURED. 1. The Superior Court of Justice (STJ), in a judgment submitted to the regime of art. 543-C of the Code of Civil Procedure (CPC), recognized the non-incidence of PIS and COFINS on typical cooperative acts (REsp No. 1.164.716/MG, First Section, judged on 4/27/2016, published in the Official Gazette on 5/4/2016). 2. During the judgment of Special Appeals No. 1.894.741/RS and No. 1.895.255/RS (topic 1.093), under the regime of repetitive appeals, the Superior Court of Justice (STJ) established the understanding that the non-cumulative nature of PIS/COFINS does not apply in situations where there is no double or multiple taxation. Article 17 of Law 11.033/2004 is inapplicable to this case. (TRF4, AC 5009065-23.2017.4.04.7005, FIRST PANEL, Judge LEANDRO PAULSEN, added to the records on 05/12/2022)

We can also cite the part of the interlocutory decision that granted the preliminary injunction in case number 000341-46.2025.4.04.7006 from the state of Paraná:

In light of the foregoing, I grant the request for urgent relief to order the defendant to refrain from demanding the collection of PIS and COFINS taxes levied on cooperative acts performed by the association, as well as to refrain from taking any collection or sanctioning actions due to the non-payment of said contributions, such as refusal to issue a tax clearance certificate, inclusion/maintenance of the plaintiff's name in CADIN, filing of tax enforcement proceedings, and registration of the debt.

Furthermore, we can also cite the ruling in case number 000341-46.2025.4.04.7006 from the state of Paraná:

In light of the foregoing, I find the requests to be justified and therefore:

1. a) to declare the plaintiff's right to exclude from the calculation basis of the PIS and COFINS contributions the amounts related to the supply, shipment, acquisition, and consumption of electricity generated by it and transmitted, through the distribution and transmission infrastructure of electricity concessionaires, to be consumed by its cooperative members;
2. b) to order the UNION to refrain from demanding the PIS and COFINS contributions in the manner described above;
3. c) to order the UNION to eventually reimburse/compensate the amounts unduly collected under this heading in the last five years preceding the filing of the action, in accordance with the grounds of this judgment, updated by the SELIC rate, from the date of each undue payment.

This does not mean that the thesis is definitively settled in all its dimensions. It does mean, however, that the Judiciary already perceives the need to adapt the tax interpretation to the new economy of distributed generation.

Limitations of the thesis and possible objections from the farm.

The first objection will be that, even without a formal profit motive, the entity organizing the shared generation may generate its own revenue if it charges amounts exceeding simple operating costs, provides independent management remuneration, offers additional services, or engages with third parties not participating in the collective structure.

In this scenario, the argument of non-incidence weakens, as the revenues begin to resemble the constitutional notion of income/turnover.

The second objection concerns the attempt to indiscriminately apply the category "cooperative act" to associations and consortia. This criticism is technically relevant and needs to be neutralized by explaining that the analogy is functional, not ontological.

The central argument, outside of cooperatives, is not "there is a typical cooperative act," but "there is no trade, no new revenue of their own, and no market operation."

The third objection will be based on evidence. The tax authorities and, in some cases, the distributor may argue that the actual model does not correspond to what the taxpayer describes.

Therefore, the article can highlight that the robustness of the thesis depends on the documentary demonstration of the structure: statute/contract, allocation rules, absence of sales to third parties, cost calculation memorandum, and adherence to the regime of Law 14.300/2022 and its regulations. ANEEL.

Regarding the right to restitution or compensation for taxes unduly collected.

The method of recovering overpaid taxes is at the taxpayer's discretion, namely: tax refund or tax compensation.

Thus, once the illegality and unconstitutionality of the tax collection is recognized, the taxpayer (consortium, association, cooperative, condominium or EMUC) has the right to choose between monetary restitution, following the procedural steps, or through tax compensation.

It is emphasized that the taxpayer has the right to restitution or compensation with any taxes administered by the Federal Revenue Service of Brazil, for all amounts collected in excess as PIS and COFINS due to the restriction of the benefit and the broadening of the calculation bases for the inclusion of ICMS, the right being ensured both by art. 74 of Law No. 9430/1996 [17] and by RFB Normative Instruction No. 2.055/2021 [18].

The amounts to be offset or refunded must be updated by the same indices used by the National Treasury for updating its tax credits, with the addition of interest equivalent to the reference rate of the Special System for Settlement and Custody – SELIC, from the dates of the undue payments until the date of the effective refund or offset, in accordance with the provisions of art. 39, § 4, of Law No. 9.250/1995 [19].

Conclusion

Shared generation imposes a coherence test on Brazilian tax law. The regulatory model designed by Law 14.300/2022 and sectoral regulations is not structured as a linear chain of energy buying and selling between multiple independent agents, but as a system of compensation, sharing, and internal appropriation of energy credits by entities linked to a common organization.

When the interpreter insists on applying the typical tax categories of traditional commerce to this phenomenon, it produces significant distortions: what has not legally circulated as merchandise is taxed; what is merely a reimbursement is taxed as revenue; and the tax base for contributions is unduly broadened on values ​​that do not represent individual wealth.

Therefore, the proper legal treatment of the subject requires separating the levels: in the ICMS (State VAT), there may be both exemption authorized by agreement and non-incidence of the tax, depending on the specific case; and in the PIS/COFINS (Social Integration Program/Contribution to Social Security Financing), the exclusion of ICMS from the base stems from Supreme Court Ruling 69; and, regarding income resulting from internal distribution/allocation, taxation should be waived whenever the absence of own revenue is demonstrated, this conclusion being especially robust in cooperatives due to Superior Court of Justice Ruling 363 and the legal regime of the cooperative act.

From a scientific perspective, the main merit of the thesis lies not only in reducing the tax burden, but in restoring the alignment between taxation and the real economic reality of shared generation.

The challenge, from now on, is to consolidate a tax doctrine for the electricity sector that treats energy compensation not as an anomaly to be forcibly categorized into old categories, but as a new phenomenon deserving of its own conceptual reconstruction.

Ultimately, the controversy examined in this article is not limited to defining the incidence—or non-incidence—of certain taxes on shared generation. What is at stake, in a broader sense, is the legal security of the agents who structure, invest in, and participate in this distributed generation model; the economic viability of projects developed under this logic; the competitiveness of shared generation as an instrument for democratizing access to energy; and the necessary coherence between tax law and the sectoral regulation of the electricity sector.

Inappropriately taxing transactions that, in essence, are not the same as typical commercial transactions or own revenue implies not only unduly burdening taxpayers, but also compromising regulatory stability and discouraging energy arrangements that the legal system itself seeks to promote.

References

[1] NATIONAL ELECTRIC ENERGY AGENCY (ANEELRegulatory Resolution No. 1.000, of December 7, 2021. Establishes the Rules for the Provision of the Public Electricity Distribution Service; revokes the Regulatory Resolutions. ANEEL Decree No. 414, of September 9, 2010; Decree No. 470, of December 13, 2011; Decree No. 901, of December 8, 2020; and other provisions. Brasília, DF: ANEEL, 2021. Available at: https://www2.aneel.gov.br/cedoc/ren20211000.pdf. Accessed on: 18 abr. 2026.

[2] NATIONAL COUNCIL OF TAX POLICY (CONFAZ). ICMS Agreement 16, of April 22, 2015. Authorizes the granting of exemption in internal operations related to the circulation of electricity, subject to billing under the Electricity Compensation System dealt with in Normative Resolution No. 482, of 2012, of ANEELBrasília, DF: CONFAZ, 2015. Available at: https://www.confaz.fazenda.gov.br/legislacao/convenios/2015/CV016_15. Accessed on: 18 abr. 2026.

[3] NATIONAL COUNCIL OF TAX POLICY (CONFAZ). ICMS Agreement 16, of April 22, 2015. Authorizes the granting of exemption in internal operations related to the circulation of electricity, subject to billing under the Electricity Compensation System dealt with in Normative Resolution No. 482, of 2012, of ANEELBrasília, DF: CONFAZ, 2015. Available at: https://www.confaz.fazenda.gov.br/legislacao/convenios/2015/CV016_15. Accessed on: 18 abr. 2026.

[4] NATIONAL COUNCIL OF TAX POLICY (CONFAZ). ICMS Agreement 16, of April 22, 2015. Authorizes the granting of exemption in internal operations related to the circulation of electricity, subject to billing under the Electricity Compensation System dealt with in Normative Resolution No. 482, of 2012, of ANEELBrasília, DF: CONFAZ, 2015. Available at: https://www.confaz.fazenda.gov.br/legislacao/convenios/2015/CV016_15. Accessed on: 18 abr. 2026.

[5] MINAS GERAIS. Law No. 22.549, of June 30, 2017. Amends Law No. 6.763, of December 26, 1975, and provides other measures. Belo Horizonte: State Secretariat of Finance of Minas Gerais, 2017. Available at: https://www.fazenda.mg.gov.br/empresas/legislacao_tributaria/leis/2017/l22549_2017.html. Accessed on: 18 abr. 2026.

[6] MINAS GERAIS. Decree No. 48.506, of September 14, 2022. Amends the ICMS Regulation – RICMS, approved by Decree No. 43.080, of December 13, 2002, and provides other measures. Belo Horizonte: State Secretariat of Finance of Minas Gerais, 2022. Available at: https://www.fazenda.mg.gov.br/empresas/legislacao_tributaria/decretos/2022/d48506_2022.html. Accessed on: 18 abr. 2026.

[7] SÃO PAULO (State). Decree No. 45.490, of November 30, 2000. Approves the Regulation of the Tax on Operations Relating to the Circulation of Goods and on the Provision of Interstate and Intermunicipal Transportation and Communication Services – RICMS. Annex I, art. 166, § 1º-A. São Paulo: Secretariat of Finance and Planning, [2000]. Available at: https://legislacao.fazenda.sp.gov.br/Paginas/textoricms.aspx#ind_art_an1.aspx. Accessed on: 18 abr. 2026.

[8] RIO DE JANEIRO (State). Law No. 8.922, of September 30, 2020. Repeals article 8 of Law No. 7.122, of December 3, 2015, and adheres to the ICMS exemption in internal operations related to the circulation of electricity subject to billing under the Electricity Compensation System. Rio de Janeiro: Legislative Assembly of the State of Rio de Janeiro, 2020. Available at: https://leisestaduais.com.br/rj/lei-ordinaria-n-8922-2020-rio-de-janeiro-revoga-o-art-8o-da-lei-no-7-122-de-03-de-dezembro-de-2015-e-adere-a-isencao-de-icms-nas-operacoes-internas-relativas-a-circulacao-de-energia-eletrica-sujeitas-a-faturamento-sob-o-sistema-de-compensacao-de-energia-eletrica-concedida-pelo-item-222-do-anexo-i-do-decreto-executivo-do-estado-de-minas-gerais-no-43-080-de-13-de-dezembro-de-2002-com-base-no-8o-da-lei-complementar-no-160-de-7-de-agosto-de-2017-e-na-clausula-decima-terceira-do-convenio-icms-no-190-2017. Accessed on: 18 abr. 2026.

[9] ESPÍRITO SANTO (State). Law No. 7.000, of December 27, 2001. Provides for the Tax on Operations Relating to the Circulation of Goods and on the Provision of Interstate and Intermunicipal Transportation and Communication Services – ICMS. Vitória: Secretariat of Finance of the State of Espírito Santo, 2001. Available at: https://sefaz.es.gov.br/Media/Sefaz/Receita%20Estadual/Legislacao/Lei%207000%20-%20Atualizada.pdf. Accessed on: 18 abr. 2026.

[10] PERNAMBUCO (State). Finance Secretariat. Consultation Resolution No. 03/2025. Process No. 2017.000003134131-39. Consultant: APESOLAR – Pernambuco Solar Energy Association. Summary: ICMS. Electric Energy Compensation System. Shared generation. Application of the power limit foreseen in § 1 of clause one of ICMS Agreement 16/2015. Recife: SEFAZ/PE, 2025. Available at: https://www.sefaz.pe.gov.br/Legislacao/Tributaria/Documents/Legislacao/Resolu%C3%A7%C3%B5es%20de%20Consulta/2025/RC003_2025.pdf. Accessed on: 18 abr. 2026.

[11] PERNAMBUCO (State). Decree No. 44.650, of June 30, 2017. Consolidates the State's tax legislation regarding the Tax on Operations Relating to the Circulation of Goods and on the Provision of Interstate and Intermunicipal Transportation and Communication Services – ICMS. Recife: Pernambuco State Finance Secretariat, 2017. Available at: https://www.sefaz.pe.gov.br/Legislacao/Tributaria/Documents/legislacao/44650/texto/Dec44650_2017.htm. Accessed on: 18 abr. 2026.

[12] MATO GROSSO (State). State Secretariat of Finance. Response to Tax Consultation. Application of ICMS exemption within the scope of the Electric Energy Compensation System – shared generation. Cuiabá: SEFAZ/MT, [n.d.]. Available at: https://app1.sefaz.mt.gov.br/sistema/legislacao/RespostaConsulta.nsf/5540d90afcacd4f204257057004b655c/4b66f01d579171d9042587530053ae5f?OpenDocument=. Accessed on: 18 abr. 2026.

[13] BRAZIL. Law No. 5.764, of December 16, 1971. Defines the National Policy on Cooperativism, establishes the legal regime of cooperative societies, and provides other measures. Brasília, DF: Presidency of the Republic, 1971. Available at: https://www.planalto.gov.br/ccivil_03/leis/l5764.htm. Accessed on: 18 abr. 2026.

[14] BRAZIL. Law No. 5.764, of December 16, 1971. Defines the National Policy on Cooperativism, establishes the legal regime of cooperative societies, and provides other measures. Brasília, DF: Presidency of the Republic, 1971. Available at: https://www.planalto.gov.br/ccivil_03/leis/l5764.htm. Accessed on: 18 abr. 2026.

[15] BRAZIL. Superior Court of Justice. Special Appeal No. 1.141.667/RS. Rapporteur: Minister Napoleão Nunes Maia Filho. First Section. Decided on May 4, 2016. Official Gazette of May 16, 2016. Topic 363 of repetitive appeals. Available at: https://scon.stj.jus.br/SCON/. Accessed on: 18 abr. 2026.

[16] BRAZIL. Law No. 13.169, of October 6, 2015. Amends Law No. 7.689, of December 15, 1988, to increase the rate of the Social Contribution on Net Profit – CSLL in relation to private insurance and capitalization legal entities, and those referred to in items I to VII, IX and X of § 1 of art. 1 of Complementary Law No. 105, of January 10, 2001; amends Laws No. 9.808 of July 20, 1999, 8.402 of January 8, 1992, 10.637 of December 30, 2002, 10.833 of December 29, 2003, 11.033 of December 21, 2004, 12.715 of September 17, 2012, 9.249 of December 26, 1995, 11.484 of May 31, 2007, 12.973 of May 13, 2014, 10.150 of December 21, 2000, and 10.865 of April 30, 2004; and provides other measures. Brasília, DF: Presidency of the Republic, 2015. Available at: https://www.planalto.gov.br/ccivil_03/_Ato2015-2018/2015/Lei/L13169.htm. Accessed on: 18 abr. 2026.

[17] BRAZIL. Law No. 9.430, of December 27, 1996. Provides for federal tax legislation, social security contributions, the administrative consultation process and other measures. Brasília, DF: Presidency of the Republic, 1996. Available at: https://www.planalto.gov.br/ccivil_03/leis/l9430.htm. Accessed on: 18 abr. 2026.

[18] BRAZIL. Special Secretariat of the Federal Revenue of Brazil. Normative Instruction RFB No. 2.055, of December 6, 2021. Provides for restitution, compensation, reimbursement and refund, within the scope of the Special Secretariat of the Federal Revenue of Brazil. Brasília, DF: Federal Revenue of Brazil, 2021. Available at: https://www.normaslegais.com.br/legislacao/instrucao-normativa-rfb-2055-2021.htm. Accessed on: 18 abr. 2026.

[19] BRAZIL. Law No. 9.250, of December 26, 1995. Art. [article number]. Amends the income tax legislation for individuals and provides other measures. Brasília, DF: Presidency of the Republic, 1995. Available at: https://www.planalto.gov.br/ccivil_03/Leis/L9250.htm. Accessed on: 18 abr. 2026.

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