The effects of ADC 66 in setting criteria on "pejotization" and the taxation of employer's social security contribution

Abstract

The aim of this paper is to demonstrate that the use of legal entities to provide intellectual services, as long as legal limits are respected, is lawful and expressly permitted not only by legislation, but also by the ratio decidendi of Declaratory Action for Constitutionality No. 66 (“ADC 66”). In this context, initially, we present fundamental assumptions to understand the relationship between legality, freedom and solidarity. Next, considering that it is the legislator who must promote fair participation of taxpayers in the payment of social contributions, never the law enforcer or the judging body, we presented the limits in the tax legislation to the disregard acts and transactions carried out by taxpayers, thereby establishing constitutional and legal criteria for the configuration, in practice, of a sham transaction and, therefore, an unlawful legal entity.