STJ Rules That Social Security Contributions Do Not Apply to the Exercise of Stock Options

On 14 October 2026, the First Section of Brazil’s Superior Court of Justice (STJ) ruled that employer social security contributions and contributions payable to third parties do not apply to the exercise of share purchase options granted under stock option plans. In its ruling on Repetitive Theme No. 1,379, the Court recognised that such transactions are commercial in nature and, therefore, cannot be classified as remuneration for work.

For companies operating these plans, the decision provides greater legal certainty and establishes an important precedent for reviewing their current treatment of social security contributions. Its application, however, depends on the specific characteristics of each plan. The commercial nature of the transaction is generally supported by factors such as actual payment for the shares, voluntary participation by the beneficiary and exposure to the risk of fluctuations in share value.

The scope of the ruling also warrants attention. Theme No. 1,379 addresses contributions arising at the time options are exercised and does not automatically extend to other long-term incentive arrangements, such as RSUs, Matching Shares and Phantom Shares. Furthermore, the exemption from these contributions does not mean that all stages of the investment are tax-free. Under Theme No. 1,226, concerning Individual Income Tax, the STJ established that, in stock option plans of a commercial nature, no income tax is payable upon the acquisition of shares, although capital gains tax applies upon their subsequent sale where a gain is realised.

The STJ’s official website confirms that the judgment of Theme No. 1,379 has been concluded. However, at the time this alert was prepared, the written judgment had yet to be published. The full decision will clarify the precise wording of the binding legal principle and allow for a more reliable assessment of its application to different plans. It is therefore advisable to await publication before drawing definitive conclusions.

Our team remains available to review your company’s stock option plan and assess the implications of the ruling for ongoing social security contribution payments and existing disputes.