Employer Social Security Contribution (CPP) and the Internship Scholarship

It is not uncommon for companies to be fined by the tax authorities for collecting the employer’s social security contribution on the amounts paid as scholarships to interns. It turns out that such a contract does not represent an employment relationship and, therefore, should not be subject to tax incidence.

This issue has been discussed at the Tax Appeals Administrative Council (CARF) for many years and among all assessments, in only nine the requirements of the law were considered fulfilled by the company, not entailing the obligation of social security payments. In all the others, CARF understood the legal violation, maintaining the assessments, due to non-compliance with requirements that proved the characterization of internship, such as proof of enrollment and attendance in the course; conclusion of an internship commitment term; compatibility between internship activities and those in the term of commitment; and supervision by the school/college with mention of approval .

This low number of cases decided in favor of taxpayers is mainly due to the fact that many companies do not observe all the necessary formalities for setting up an internship activity, resulting in the need for extreme attention regarding how much must be fulfilled in order to be able to to regulate the internship contract.

In the Judiciary, the subject is also discussed, and in the judgment of APELREEX 00183201720094025101, before the TRF-2, the magistrates understood that, “the plaintiff was hired for a Bachelor of Law internship, however, without the intervention of an educational institution and without the provision of insurance against personal accidents; therefore, you must be assured of the social security bond, considering that an authentic internship contract is not characterized, in the case under examination. In fact, the contract between the Caixa de Construções de Casas para Pessoal da Marinha (CCCPM) and the plaintiff completely diverges from the standard established by law for internship contracts”, the company having been condemned to collect employer’s social security contribution incident on the remuneration paid to the plaintiff in the period in question.

However, back to the administrative sphere, in 2021 the 2nd Panel of the Superior Chamber of CARF removed two social security contribution charges due to the payment of scholarships for interns paid by a financial institution. In their defense, they used the argument that the two main assumptions that must be present in an internship contract would be fulfilled, namely: (i) provide complementary teaching and (ii) be carried out through the execution of a term of commitment.

Based on these arguments, a decision was rendered in favor of the taxpayer (cases nº 16327.001894/2008-78 and 16327.001905/2008-10).

In the first case, contributors also adduced in their thesis that attendance monitoring and school evaluations are the responsibility of the educational institution, therefore, not being the competence of the intern’s contractor. Said understanding was followed by four of the directors, in addition to the Reporting President.

As a result, even though there are decisions in favor of the taxpayer even when he has not fulfilled all the formal requirements of an internship contract, it should be noted that the matter is quite controversial. Thus, it is recommended that companies evaluate the way in which they have dealt with the subject, paying attention to the internal adjustment regarding the requirements discussed above, required for the characterization of the internship relationship, removing any possible non-compliance and consequent incidence of social security taxation.

Our office is available to advise you on the subject in an advisory manner, as well as to act in the administrative or judicial contentious sphere in defense of the non-discharacterization of the internship relationship and, therefore, the removal of the tax incidence regarding the amounts paid to the scholarship for students.


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