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It is common in day-to-day judicial practice the filling of a criminal complaint in the context of tax crimes against all company’s directors, managers and shareholders, or in the face of anyone who has the decision making power within a particular company.

Shortly after tax administrative proceedings are concluded, these individuals are summoned in police investigations and can later be subjected to criminal prosecution. Tax evasion investigations often fall short to investigate the real existence of unlawful acts (let us remind the high complexity of Brazilian tax system), let alone to determine the real decision-making individuals who can be potentially liable. This scenario occurs for two reasons.

The first one is that Brazilian case law advocates for the flexibility of Article 41 of the Criminal Procedure Code. According to these decisions, Prosecutors are not obliged to describe in detail and the specifics conducts each agent in the complaint has committed. Hence, the complaint can be offer just with the accused identification and his position within the company, as well as the demonstration of the existence of a tax crime.

The application of this jurisprudence can be exemplified by the decided in the AgRg in Habeas Corpus n. 508.036 / SC, in the vote by the Min. Jorge Mussi, who decided “In the so-called corporate crimes, although the accusatory entrance exam cannot be at all generic, is valid when, despite not describing in detail the individual actions of the accused, it demonstrates the plausibility of the imputation and allowing the exercise of broad defense, in which case the requirements of article 41 of the Code of Criminal Procedure are considered to be met ”(STJ, AgRg at HC no. 508.036 / SC, rel. Min. Jorge Mussi; Fifth Class; tried on 28/05/2019).

Based on this case law, it is possible that anyone in a command position within the company could be the perpetrator of a tax crime. This understanding, leads to criminal complaints against all individuals who hold decision making position within the company, even if there is no relationship between the scope of their authorities and the tax evasion.

This case law thus offers severe risks to criminal liability to executives. Even if a detailed description of the agent’s conduct is impracticable, it should remain the burden of the Public Prescutor’s Office to describe all the elements that constitute the crime attributed to the accused, which includes the existence of a malicious conduct that has a causal effect with the result of the crime, which is the embezzlement suffered by the Treasury.

The second reason that explains this scenario is the lack of interpretation that is made between criminal responsibility and administrative responsibility for tax infractions. Regarding the administrative responsibility, the Article 136 of the Brazilian National Tax Code prescribes that “the violation of tax legislation liability does not depend on the intention of the agent or the person responsible and on the effectiveness, nature of the effects of the act”.

Therefore, tax infraction is an impersonal liability. The exception is in article 137 of the Brazilian National Tax Code, which provides, in short, that the liability for tax infractions may be personal to the agent in relation to violations considered by law as crimes or misdemeanors, as to the infractions in whose definition the agent’s specific intent be elementary, or those arising directly and exclusively from specific intent.

The administrative jurisdiction, however, does not reserve more space for investigating the real existence of deceit and quick conclusions are often accepted. It should be noted that there is not even a subpoena for testimony.

In the other hand, in criminal law, liability is always personal and, in tax crimes, deceit is required. No one can be punished for a crime without deception, except when expressed in law, as determined by Article 18 of the Penal Code. That is, there is criminal liability for wrongful conduct only when expressly provided by law. In the context of tax crimes, regulated by Law 8,137/90 and the Penal Code itself, there is no provision for any wrongful tax crime in the Brazilian legal system.

Therefore, for the accountability of any directors, managers and partners of a certain company, there must be evidence of willful conduct and a causal link between it and the tax evasion. It is not enough that a certain person exercises a commanding position in the company to be held criminally responsible for tax evasion, if there is no deceit and a causal relationship.

At least on this topic, the jurisprudence moves in this direction. The Brazilian Federal Supreme Court, in a vote by Minister Celso de Mello, decided that “the objective circumstance of someone being merely a partner or exercising a management or administrative position in a business society is not sufficient, in itself, to authorize the presumption of guilt (non-existent in our legal-penal system) and, even less, to justify, as an effect derived from this particular formal qualification, the corresponding criminal prosecution ”(STF, Habeas Corpus n. 88.875 / AM; rel. Min. Celso de Mello; Second Panel; published on March 12, 2012).

In the context of the State Court of São Paulo, the jurisprudence moves in a similar direction. In recent judgments, the court has ruled that it is not enough for the person to be a partner, manager or director of the company, and the Public Prosecutor’s burden is to prove the existence of intent and a causal link to assess criminal responsibility.

An example of this is the Criminal Appeal Judgment n. 0061518-74.2013.8.26.0506, in a vote by Judge Camilo Lelis, who decided “It is essential to distinguish tax liability from criminal liability, the latter being certain that there is no strict liability, resulting only from the condition of managing partner of the debtor company” (…) criminal law, for any of the partners to be responsible for any of the crimes set out in Law 8.137 / 90, there must be proof of the conduct they have practiced and which subsumes to any of the criminal types in question”(TJSP, Criminal Appeal 0061518-74.2013.8.26. 0506; Rel. Des. Camilo Léllis; 4th Criminal Law Chamber; Judgment Date: 10/9/2020).

Therefore, in conclusion, despite the risk of being subject of criminal investigations for crimes against the tax order that managers and directors in general suffer, there are several possible defenses and distinctions that can and should be made to limit attempts at criminal liability.