XML 71 R33.htm IDEA: XBRL DOCUMENT v3.22.1
Provisions and contingent liabilities
 12 Months Ended
Dec. 31, 2021
Disclosure of other provisions [abstract]  
Provisions and contingent liabilities Provisions and contingent liabilitiesThe Company and its subsidiaries are party to judicial and administrative litigations before various courts and government bodies, arising from the normal course of operations, involving tax, civil and labor matters and other issues. Periodically, Management evaluates the tax, civil and labor and risks, based on legal, economic and tax supporting data, in order to classify the risks as probable, possible or remote, in accordance with the chances of them occurring and being settled, taking into consideration, case by case, the analyses prepared by external and internal legal advisors.
20212020
Tax contingencies10,374 10,097 
Civil contingencies12,539 4,281 
Labor contingencies6,395 5,333 
Total provision29,308 19,711 
Judicial deposits (i)11,202 10,199 
(i)
There are circumstances in which the Group is questioning the legitimacy of certain litigations or claims filed against it. As a result, either because of a judicial order or based on the strategy adopted by management, the Group might be required to secure part or the whole amount in question by means of judicial deposits, without this being characterized as the settlement of the liability. These amounts are classified as “Other assets” on the consolidated balance sheets and referred above for information.
Changes in the provision during the year
202120202019
Balance at January 119,711 15,193 17,474 
Monetary correction6,837 4,102 2,492 
Provision8,457 3,499 2,338 
Reversed(3,132)(1,454)(3,939)
Payments(2,565)(1,629)(3,172)
Balance at December 3129,308 19,711 15,193 
Nature of claims
a)    Tax
As of December 31, 2021, the Group has claims classified as probable risk of loss in the amount of R$10,374 (December 31, 2020 - R$10,097), regarding social contributions on revenue (PIS and COFINS), questioning the exclusion of this own taxes on the calculation basis over revenues. In accordance with Brazilian laws and tax regulations, this practice is legal for VAT (ICMS) taxes. These lawsuits are supported by court deposits in its entirety.
b)    Civil
The majority of the civil and administrative claims involve matters that are normal and specific to the business, and refer to demands for indemnity primarily due to: (i) financial losses in the stock market; (ii) portfolio management; and (iii) alleged losses generated from the liquidation of customers assets in portfolio due to margin cause and/or negative balance. As of December 31, 2021, there were 105 civil and administrative claims for which the likelihood of loss has been classified as probable, in the amount of R$12,539 (December 31, 2020 - R$4,281). An amount of R$758 was deposited in court as of December 31, 2021 (December 31, 2020 – R$100).
c)    Labor
Labor claims to which the Group is party primarily concern: (i) the existence (or otherwise) of a working relationship between the Group and IFAs; and (ii) severance payment of former employees. As of December 31, 2021, the Company and its subsidiaries are the defendants in approximately 18 cases involving labor matters for which the likelihood of loss has been classified as probable, in the amount of R$6,395 (December 31, 2020 - R$5,333).
Contingent liabilities - probability of loss classified as possible
In addition to the provisions constituted, the Company and its subsidiaries have several labor, civil and tax contingencies in progress, in which they are the defendants, and the likelihood of loss, based on the opinions of the internal and external legal advisors, is considered possible, and the contingencies amount to approximately R$487,121 (December 31, 2020 - R$217,426).
Below is summarized these claims by nature:
20212020
Tax (i)228,602 71,027 
Civil (ii)232,775 136,228 
Labor25,744 10,171 
Total487,121 217,426 
(i)
In December 2019, the Group was notified by tax authorities for a requirement of social security contributions due to employee profit sharing payments related to the calendar year 2015, allegedly in violation of Brazilian Law 10,101/00. Currently, the first appeal was denied by the first administrative level of the Revenue Service Office. The Group will provide the ordinary appeal to the Administrative Council of Tax Appeals (“CARF”). There are other favorable CARF precedents on the subject and the Group obtained legal opinions that support the Group’s defense and current practice.
In November 2021, the Group was notified by tax authorities for a requirement of social security contributions due to employee profit sharing payments related to the calendar year 2017, allegedly in violation of Brazilian Law 10,101/00 and non-deductible expenses for the income tax in amount of received by the members of Council. The amount claimed is R$97,456. An administrative appeal was filed against the assessment, which is awaiting judgment by the Federal Revenue of Brazil (“RFB”).
In December 2021, the Group received a tax assessment in total amount of R$58,262 for benefits that occurred in 2016, regarding the amortized goodwill originated in the acquisition of the General Atlantic and Actis at XP CCTVM in different years (2013 and 2016). An administrative appeal was filed against the assessment, which is awaiting judgment by the Federal Revenue of Brazil (“RFB”).
(ii)
The Group is defendant in 586 civil and administrative claims by customers and investment agents, mainly related to portfolio management, risk rating, copyrights and contract termination. The total amount represents the collective maximum value to which the Group is exposed based on the claims’ amounts monetarily restated.