Ruling reinforces protections for individuals with serious illnesses and ensures continued tax relief
The Federal Court of Rio de Janeiro has ruled in favor of a retired taxpayer diagnosed with malignant neoplasm, granting full exemption from income tax withheld at source (IRRF) on his pension benefits. The decision was issued by the 12th Federal Court for Tax Enforcement, reaffirming rights provided under Brazilian Law No. 7,713/1988.
The Case: Exemption Revoked Despite Ongoing Cancer Diagnosis
The claimant was diagnosed with prostate cancer (ICD C61) in 2018 and initially received income tax exemption on his retirement income, as allowed by law. However, five years later, the tax authority revoked the exemption, arguing that the taxpayer had not proven that the illness was still active.
As a result, the income tax withholding resumed, prompting the retiree to file a federal lawsuit demanding immediate suspension of the deductions and a refund of the amounts already withheld.
Legal Basis: Clear Rights for Serious Illnesses
The court relied on Article 6, item XIV of Law No. 7,713/1988, which grants tax exemption to individuals suffering from serious illnesses, including malignant neoplasms, regardless of when the diagnosis occurred.
The judge also cited precedent from the Superior Court of Justice (STJ), particularly Special Appeal No. 1.116.620/BA (Theme 250), which affirms that:
- The list of exempt diseases is exhaustive, and
- No continuous proof of the illness’s activity is required to maintain the exemption.
Importantly, the STJ has also ruled (in MS 21.706/DF) that the goal of the tax exemption is to reduce financial strain on retirees with serious conditions — recognizing that medical expenses often continue even when the disease is stable.
The Court’s Decision: Immediate Suspension of Withholding
The judge granted emergency injunctive relief, based on two key elements:
- ✅ Fumus boni juris (likelihood of success): The claimant provided medical documentation confirming his diagnosis, which falls under the list of legally exempt conditions.
- ✅ Periculum in mora (risk of harm): Continued taxation of retirement income — a subsistence-level source of income — would cause financial harm.
The court ordered immediate suspension of IRRF deductions and gave the Federal Government 10 days to comply, under penalty of fines. The government must also respond within the legal deadline.
Conclusion: A Victory for Vulnerable Taxpayers
This ruling reaffirms legal protections for pensioners with serious illnesses, ensuring that the income tax exemption is upheld without unjustified demands for ongoing proof. It underscores the essential role of the judiciary in safeguarding taxpayer rights and protecting individuals from undue financial hardship.
Retirees facing similar circumstances should seek legal assistance to secure their rights and prevent unlawful income tax withholdings.