The Brazilian Superior Court of Justice (Superior Tribunal de Justiça – “STJ”) unanimously ruled that stock options granted under Article 168, Paragraph 3, of Law No. 6.404/1976 (Brazilian Corporations Law) are not subject to employer social security contributions or contributions payable to third-party entities. The decision was rendered on October 14, 2026, under Binding Precedent No. 1.379.
The STJ reaffirmed the mercantile nature of stock option plans, holding that they do not constitute employment-related compensation. Justice Sérgio Kukina served as the reporting justice in the proceedings, which involved Special Appeals Nos. 2.199.631/SP and 2.070.059/SP
The decision extends the position previously adopted by the STJ under Binding Precedent No. 1,226, to social security contributions. In that ruling, issued in September 2024, the Court recognized the mercantile nature of stock option plans and held that individual income tax is not levied on the acquisition of shares through the exercise of stock options, but applies to any capital gains realized upon their subsequent sale.
In this context, the STJ established the following binding legal holding: “Under the stock option plan regime provided for in Article 168, Paragraph 3, of Law No. 6.404/1976, given the mercantile nature of the transaction, as established under STJ Binding Precedent No. 1.226, employer social security contributions and contributions payable to third-party entities are not levied on the exercise of stock options, as such transactions do not constitute employment-related compensation”.
The ruling resolves a longstanding controversy that had resulted in conflicting decisions by the Brazilian Administrative Council of Tax Appeals (Conselho Administrativo de Recursos Fiscais – “CARF”) and the judicial courts. As the decision was rendered under the repetitive appeals procedure, the precedent is binding on lower courts, including in cases that were stayed following the selection of the issue for review in September 2025.
For companies that offer stock option plans, the ruling provides greater legal certainty regarding the social security treatment of these arrangements and creates an opportunity to review contributions paid in previous years. However, the application of the precedent will depend on the specific characteristics of each plan, particularly whether it effectively qualifies as a mercantile arrangement. In this regard, factors such as voluntary participation by beneficiaries, the requirement to pay consideration and exposure to market risks are relevant in assessing whether a particular plan falls within the scope of the STJ’s ruling.
For more information, please contact our Tax and Wealth Management practice professionals.
