Employer social security contributions and the extension of maternity leave under the Citizen Company Program

The Citizen Company Program, established by Law 11,770/2008, was designed to allow the extension of maternity leave by granting tax incentives to companies that adhere to it. This is a relevant instrument to extend the period of coexistence between mothers and their newborn children, a fundamental right provided for in arts. 6 and 203, I, of the Federal Constitution, at the same time as it brings tax advantages to the employer.

Despite the undeniable social progress promoted by the Program, there was, for a long time, a low level of adherence by companies opting for the Real Profit taxation regime. One of the reasons for such reticence lies in the legal uncertainty that existed surrounding the incidence of the employer’s social security contribution on the amounts paid during the 60 days of maternity leave extension under the Citizen Company Program.

In 2020, in the judgment of RE 576.967, the STF established the thesis with general repercussion that: “The incidence of social security contributions borne by the employer on maternity pay is unconstitutional” (Theme 72). The reason for the Supreme Court’s decision was that the imposition of taxation on maternity pay, an amount that does not compensate for services provided, would represent a discriminatory measure and a general obstacle to the hiring of women, thus violating the constitutional rights to equality between men and women and the protection of maternity, the family and the inclusion of women in the labor market.

However, due to the fact that the STF’s thesis dealt exclusively with the maternity salary provided for in social security legislation, the Federal Revenue of Brazil took the position that it was impossible to apply it to the extension of maternity leave within the scope of the Citizen Company Program, as recorded in the Query Solution 27/2023. In the understanding of the Federal Revenue, the extension would not have the nature of a social security benefit and would have its own contours, which would not allow it to be included in the exemption declared by the STF.

This impasse not only discouraged new business adhesion to the Program, but also forced many companies already participating to seek legal action that would grant them social security exemption on the amounts paid.

Correctly, through a Normative Instruction published on April 19, 2024, the Federal Revenue of Brazil revised its position to expressly determine the non-incidence of employer social security contributions on the amount paid during the extension of maternity leave under the Program Citizen Company (Normative Instruction No. 2185/2024).

This change formalized the position that had already been issued by the Attorney General of the National Treasury in opinion SEI 468/2023 and confirmed in joint opinion SEI 52/2023, eliminating, once and for all, existing discussions around the subject.

Therefore, companies participating in the Citizen Company Program can, at this time, no longer include the amounts paid under the Program in the calculation basis of their social security contributions, with legal certainty. On the other hand, those who have collected contributions on these amounts in the past may seek recovery of such amounts, whether through administrative refunds, legal action for undue debt or even spontaneous compensation, depending on the specific circumstances.

As a result, it is projected that there will be an increase in adherence to the Citizen Company Program, advancing its important purposes of supporting motherhood, family and parenting, while at the same time bringing tax benefits to companies, with the desired legal security.