MERCADOLIBRE INCMELI
MERCADOLIBRE INC Commitments Disclosure
COMMITMENTS AND CONTINGENCIES
Litigation and Other Legal Matters
The Company is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings. The Company accrues liabilities when it considers that future costs will probably be incurred and such costs can be reasonably estimated. Proceeding-related liabilities are based on developments to date and historical information related to actions filed against the Company. As of December 31, 2025, the Company had accounted for estimated liabilities involving proceeding-related contingencies and other estimated contingencies of $129 million (net of judicial deposits) within non current other liabilities to cover legal actions against the Company for which its Management has assessed the likelihood of a final adverse outcome as probable. Expected legal costs related to litigations are accrued when the legal service is actually provided.
In addition, as of December 31, 2025, the Company and its subsidiaries are subject to certain legal actions considered by the Company's Management and its legal counsels to be reasonably possible of resulting in a loss for an aggregate amount up to $449 million. No loss amounts have been accrued for such reasonably possible legal actions, the most significant of which are described below.
The following table summarizes the contingencies activity during the years ended December 31, 2025, 2024 and 2023:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Contingencies | (In millions) | ||||||||||||||||
| Balance at beginning of year | $ | 135 | $ | 124 | $ | 53 | |||||||||||
| Charged to Net income | 106 | 176 | 335 | ||||||||||||||
| Judicial deposits | (128) | (92) | (273) | ||||||||||||||
| Charges Utilized / Currency translation adjustments / Write-offs | 16 | (73) | 9 | ||||||||||||||
| Balance at end of year | $ | 129 | $ | 135 | $ | 124 | |||||||||||
Tax Claims
Withholding Tax in the Brazil-Argentina Double Taxation Convention
On November 6, 2014, the Brazilian subsidiaries, Mercadolivre.com Atividades de Internet Ltda., eBazar.com.br Ltda., Mercado Pago Instituição de Pagamento Ltda. (formerly known as “Mercado Pago.com Representações Ltda.”) and the Argentine subsidiary, MercadoLibre S.R.L., filed a writ of mandamus and requested a preliminary injunction with the Federal Court of Osasco against the federal tax authority to avoid the withholding income tax (“IRRF”) over payments remitted by the Brazilian subsidiaries to MercadoLibre S.R.L. for the provision of IT support and assistance services by the latter, and requested reimbursement of the amounts improperly withheld over the course of the preceding five (5) years. An initial injunction granted in 2014 was revoked in 2015, and subsequent appeals were unsuccessful through 2021, with disputed amounts deposited in court. In 2023 and 2024, the matter advanced to the Superior Court of Justice, which determined in October 2024 that the case would be judged as a binding precedent. Besides, in cases involving other taxpayers which also applied the convention signed between Brazil and Argentina to prevent double taxation (“Convention”) as amended by the 2017 protocol, the Superior Court of Justice decided the IRRF is due in the State of the source (i.e. Brazil), given that the Convention grants such rights regardless whether the services provided between the parties contain transfer of technology or not. Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is probable based on the technical merits of the Company’s tax position and the existence of adverse decisions issued by the Superior Court of Justice previously mentioned.
Considering that the Convention to prevent double taxation was amended in 2017, the Company started a new tax claim for the period from January 2019 onwards, and the court granted a preliminary injunction recognizing the right of collecting the withholding tax at a 10% rate. As a result of this preliminary injunction, further judicial deposits of withholding tax were based on a rate of 10%. On September 6, 2025, the first instance of the Federal Justice rendered a judgment revoking the previously granted injunction and denying the requested writ of mandamus. The Company appealed this decision to the Federal Regional Court of the 3rd Region and submitted a request for interim relief on appeal aiming to maintain the suspension of tax enforceability. The Federal Regional Court of the 3rd Region denied the Company’s request. Therefore, on October 10, 2025, the Company deposited into court the amount arising from the difference in the withholding tax rate for $25 million from September 2024 onwards. According to the current stage of both cases, the Company maintains the provision considering a 15% rate.
On September 17, 2024, the Brazilian subsidiary Mercado Crédito Sociedade de Crédito, Financiamento e Investimento S.A. also filed a writ of mandamus with the same subject, for both intercompany management and IT services agreements. The preliminary injunction was initially granted, but the Federal Government filed an interlocutory appeal, and the decision was reversed on December 15, 2025. Therefore, the Company started depositing the withholding tax on court and the case is pending judgment. Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is probable based on the technical merits of the Company’s tax position and the existence of adverse decisions issued by the Superior Court of Justice.
On October 10, 2024, the Company filed a writ of mandamus and requested a preliminary injunction to prevent the withholding of income tax on payments remitted to Argentina for intercompany management agreements between the Argentine subsidiary MercadoLibre S.R.L. and the Brazilian subsidiaries eBazar.com.br Ltda. and Mercado Pago Instituição de Pagamento Ltda. (considering the writ of mandamus filed in 2014 had not included intercompany management services), as well as management and IT services agreements involving Mercado Pago Corretora de Seguros Ltda., by applying the Convention to prevent double taxation or, alternatively, by applying the 10% tax rate cap. For this case, a favorable first-instance decision was rendered on December 9, 2025. The case will proceed to appellate review. Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is probable based on the technical merits of the Company’s tax position and the existence of adverse decisions issued by the Superior Court of Justice.
For that reason, the Company has recorded a provision for the disputed amounts, which was $528 million as of December 31, 2025, and which was recorded in non-current other liabilities in the consolidated balance sheets, net of the corresponding judicial deposits for $508 million (which includes $112 million of interest income).
Interstate rate of ICMS-DIFAL on interstate sales
Interstate rate of ICMS-DIFAL on interstate sales without Complementary Law
During 2020 and 2021, the Brazilian subsidiaries, eBazar.com.br Ltda. and Mercado Pago Instituição de Pagamento Ltda., filed 15 writs of mandamus with the State Courts of Justice where these companies have sales branches in order to prevent Brazilian states from collecting the ICMS on interstate sales at a differential rate (“ICMS-DIFAL”) without the existence of a complementary law. Four of these cases were filed in 2020 (for the branches of Barueri and Louveira) and the other 11 were filed in 2021, after eBazar.com.br Ltda. opened a new branch in Extrema. On February 24, 2021, the Brazilian Supreme Court (“STF”) ruled on the controversy in a binding precedent, which declared the unconstitutionality of ICMS-DIFAL without the proper complementary law. In the same case, however, the Supreme Court ruled on the modulation of the effects of its decision (with retroactive effect).
From those 11 cases filed by the Company after the STF’s decision (after February 24, 2021), 8 became final and unappealable in favor of the corresponding States, and therefore their corresponding liabilities were settled with the corresponding judicial deposits. Other 2 of the 11 cases became final and unappealable in favor of Ebazar.com.br Ltda. Finally, the remaining case of those 11 cases is still pending and may not stand because of the modulation of effects with respect to that decision. Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing is probable. For that reason, the Company has recorded a $2 million provision for the disputed amounts related to the remaining case, which is presented net of the corresponding judicial deposits of $2 million.
With respect to the 4 cases filed by the Company prior to the STF’s decision (before February 24, 2021), 2 of them became final and unappealable in favor of the Company. Of the remaining 2 cases, in June 2024, one of the cases related to the State of Rio de Janeiro received judgment partially in favor of the Company. In September 2025, the Company obtained a partially favorable second instance decision and filed a motion for clarification, which is still pending judgment. In September 2024, the other one of the cases, related to the State of Paraná, had been received in the Superior Tribunal of Justice to the judgment of a Special Appeal filed by the State, which is now pending. The Company has not recorded any liability for the controversial amounts. The Company deposited into court the disputed amounts. As of December 31, 2025, the total amount of the deposits related to the ongoing cases was $4 million.
Interstate rate of ICMS-DIFAL on interstate sales under Law No. 190/22
In January 2022, (therefore, already in the course of fiscal year 2022 and already in full application of the understanding of the Supreme Court for unconstitutionality), supplementary Law No. 190/22 was published, outlining the general rules for the requirement of DIFAL and expressly mentioning the need to comply with the principle of anticipation or prospective application of taxes (pursuant to which no tax may be levied before the expiry of ninety days from the enactment of the law or in the same fiscal year of enactment). Notwithstanding this provision, which expressly points to the need to comply with the anticipation, Brazil’s Federation States have not complied with this guarantee. Therefore, eBazar.com.br Ltda. and Mercado Pago Instituição de Pagamento Ltda., filed writs of mandamus to the 27 Federation States, aimed at preventing the Brazilian tax authorities demand payments of the DIFAL. In this regard, the STF has issued a decision regarding the constitutionality of the supplementary Law on November 29, 2023. In the judgment, the majority of STF judges considered the supplementary Law No. 190/22 to be constitutional, therefore, the ICMS-DIFAL is due from April 5, 2022, due to the corresponding time lapse of ninety days between the law enacting and the beginning of the charge. This decision was reached in a Direct Action of Unconstitutionality (ADI 7066) but is not yet final, as a motion for clarification filed on May 13, 2024 is still pending.
On October 21, 2025, in a leading case (Theme 1266), the STF reaffirmed the ADI 7066 ruling but clarified that, exclusively for fiscal year 2022, DIFAL cannot be collected from taxpayers who had filed lawsuits challenging the tax by November 29, 2023 (as the Company did), and had not paid the tax that year. This decision from STF led to an update in the Company’s risk assessment for these cases, whose risk of losing had been considered probable and is now considered remote. Therefore, the Company recognized a reversal on the $33 million provision during the three-month period ended December 31, 2025. The deposits will be withdrawn to the extent that the Courts provide authorization.
Interstate rate of ICMS-DIFAL over fixed assets
From April to September 2022, the Brazilian subsidiary Mercado Envios Serviços de Logística Ltda., now incorporated by eBazar.com.br Ltda., also filed writs of mandamus to 3 Federation States (São Paulo, Santa Catarina and Bahia), for the purpose of preventing the Brazilian tax authorities from demanding payment of the DIFAL over their respective fixed assets not explicitly addressed by the supplementary Law No. 190/22. Regarding this topic, the STF has not expressly pointed to the principle of anticipation. Therefore, there are two controversies regarding DIFAL over fixed assets: (i) if DIFAL is applicable under the previous supplementary Law No. 87/96, and (ii) if supplementary Law No. 87/96 is deemed not applicable, if the new supplementary Law No. 190/22 needs to comply with the principle of anticipation. In this last controversy, the STF did not mentioned that the same decision above mentioned applies to the Brazilian subsidiary Mercado Envios Serviços de Logística Ltda., and its writs of mandamus. The resolution of the controversy will depend on the adjudication of the leading case (Theme No. 1369) by the Brazilian Superior Court of Justice (“STJ”). Therefore, Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is reasonably possible for the period between January 1, 2022 to April 4, 2022, and probable for the period between April 5, 2022 to December 31, 2022 based on the technical merits of the Company’s tax position. For that reason, the Company has not recorded any liability for the controversial amounts related to the period until April 4, 2022, and has recorded liabilities for the disputed amounts related to the period from April 5, 2022 to December 31, 2022 for $3 million which are presented net of the corresponding judicial deposits of $3 million.
Exclusion of ICMS tax benefits from federal taxes base
The Company has ICMS tax incentives granted by the State of Minas Gerais, through a special regime signed with the state by means of a term of agreement, which are aimed at implementing and expanding business in that state. See Note 2 – Summary of significant accounting policies of these audited consolidated financial statements for additional detail on the ICMS tax incentives.
On November 9, 2021 the Company filed a writ of mandamus which claimed the exclusion of the amounts relating to the ICMS tax benefits granted by the State of Minas Gerais through the special regime from the tax base of the Corporate Income Tax (“IRPJ”) and of the Social Contribution on Net Profits or CSLL. After a series of favorable decisions, on April 4, 2025, the case became final and unappealable in favor of the Company. The Company had recorded a corresponding income tax benefit arising from the ICMS tax incentives from September 2021 up to December 2023, which amounted to $38 million considering the exchange rate as of December 31, 2025.
On April 25, 2023, the Company filed a writ of mandamus seeking an injunction and claiming the exclusion of the amounts relating to the ICMS tax benefits granted by the State of Minas Gerais in the tax base of the Social Contributions (PIS and COFINS). Favorable first-instance decisions were issued; however, in October 2024 the proceedings were stayed pending a final ruling by the STF on a leading case (Theme 843). Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is reasonably possible but not probable based on the technical merits of the Company’s tax position. For that reason, the Company has not recorded any expense or liability for the disputed amounts. As of December 31, 2025, the total disputed amount was $14 million.
In December 2023 Law 14,789 was enacted, with effect from January 2024, modifying the previous regulation so that the inclusion of the presumed tax credits in the calculation basis of IRPJ/CSLL and PIS/COFINS would become mandatory. On October 18, 2024, the subsidiary eBazar.com.br Ltda. filed two new writs of mandamus, seeking the recognition of the right not to submit to the illegal and unconstitutional requirement of the IRPJ, CSLL, PIS and COFINS on the presumed tax credits from transactions related to the ICMS in the fiscal year of 2024 forward.
Regarding the writ of mandamus filed to set aside the federal contributions IRPJ and CSLL under Law 14,789 (from January 2024 onwards), a preliminary injunction was granted in September 2025 and subsequently upheld on appeal, suspending the enforceability of the related tax assessments. Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is not more likely than not based on the technical merits of the Company’s tax position. Accordingly, the Company has not recorded any expense or liability for the disputed amounts. As of December 31, 2025, the total disputed amount was $102 million.
Regarding the writ of mandamus filed to set aside the federal contributions PIS and COFINS under Law 14,789 (from January 2024 onwards), injunctions were granted and upheld in 2025, and the proceedings have been stayed pending the STF’s decision on Theme 843. Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is possible but not probable based on the technical merits of the Company’s tax position. Accordingly, the Company has not recorded any expense or liability for the disputed amounts. As of December 31, 2025, the total disputed amount was $28 million.
Services Tax exclusion in the tax base of the Federal Contributions (PIS/COFINS)
On August 29, 2017, the Brazilian subsidiaries, eBazar.com.br Ltda., Ibazar.com Atividades de Internet Ltda., Mercado Pago Instituição de Pagamento Ltda., and Mercado Envios Serviços de Logística Ltda., filed a writ of mandamus and requested a preliminary injunction before the Federal Justice in Osasco against the Federal Government to exclude the Municipal Service Tax in the tax base of the Federal Contributions (PIS/COFINS). Favorable first- and second-instance decisions were issued in 2019. Subsequent appeals by the Federal Government remain pending before the STF, where the proceedings of a related leading case have been suspended since February 2021. The STF started over the judgment on August 28, 2024. However, after a draw in the trial, the judges decided again to suspend the case. Management, based on the opinion of external legal counsel and the current composition of the Brazilian Supreme Court (who has shown dubious jurisprudence in similar cases), is of the opinion that the risk of losing the case is probable. For that reason, the Company has recognized a provision for the disputed amounts of $73 million.
Administrative tax claims
Federal taxes - Tax payments for the 2016 fiscal year
On October 30, 2020 and November 9, 2020, Mercado Pago Instituição de Pagamento Ltda. and eBazar.com.br Ltda., respectively, received tax assessments claiming income tax payments for the 2016 fiscal year, with respective penalties and fines. In these assessments, the tax authorities do not recognize certain expenses incurred by the Brazilian subsidiaries, such as technology services imported from MercadoLibre S.R.L., Meli Uruguay S.R.L., and MercadoLibre, Inc., as deductible for income tax purposes. The tax authorities concluded that the Brazilian entities failed to submit sufficient evidence during the tax assessment that these services were necessary and effectively hired and paid by the Brazilian subsidiaries. The tax assessments that Mercado Pago Instituição de Pagamento Ltda. and eBazar.com.br Ltda. received amounted to a total of $21 million and $17 million, respectively, considering the exchange rate as of December 31, 2025. The subsidiaries challenged the assessments in administrative proceedings, asserting that the services were necessary, effectively rendered, and properly documented. First-instance administrative decisions issued in 2021 were unfavorable, and both cases were appealed. In the case of eBazar.com.br Ltda., the second-instance administrative court remanded the matter for further evidentiary proceedings, resulting in a partially favorable decision in November 2025, which is currently subject to a special appeal filed by the Federal Government in January 2026. The administrative appeal relating to Mercado Pago Instituição de Pagamento Ltda. remains pending. Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is not more likely than not. For that reason, the Company has not recorded any expense or liability for the disputed amounts.
Federal taxes - Revenue accounts 2017 fiscal year
On December 30, 2022, eBazar.com.br Ltda. and one of the Company’s Senior Legal Directors received three tax assessments claiming corporate income taxes (IRPJ and CSLL) in the amount of $80 million, IRRF in the amount of $12 million, and PIS and COFINS in the amount of $13 million, all of them in relation to the taxable year of 2017, including punitive fine of 150% over the tax charged and interest on late payments based on the SELIC rate, and according to the exchange rate as of December 31, 2025. The Senior Legal Director was assessed as jointly liable with eBazar.com.br, due to his role as statutory officer, under provisions of the National Tax Code that enable joint tax liability for acts potentially in violation of the law or the by-laws. With respect to IRPJ and CSLL, the tax authorities concluded that the Brazilian company failed to report taxable income as the company has made book entries in the profit and loss accounts, reverting previous revenues or other revenue accounts, as well as for using foreign languages such as English and Spanish in its book-keeping. The tax authorities also claimed that the company failed in the issuance of invoices, disregarding that the company indeed has a Special Tax Regime granted by the Municipality of Osasco that allows the issuance of a single invoice per period. In July, 2024 in the tax assessment case claiming corporate income taxes (IRPJ and CSLL), a first-instance administrative decision partially favored the Company by reducing the punitive fine from 150% to 100%, while maintaining the tax assessments and joint liability. The Company appealed, and in September 2025 the administrative court of second instance remanded the IRPJ and CSLL matters for further evidentiary proceedings, which remain pending. Regarding the IRRF, the assessed amounts are already deposited in court under a separate writ of mandamus addressing the application of the Brazil-Argentina tax convention. In September 2025, the tax authorities acknowledged the existence of such deposits, and the matter remains pending judgment. In the case of PIS and COFINS, the administrative authorities initiated additional verification procedures in December 2023, and the case remains under review. The Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the cases is not more likely than not in the cases of IRPJ and CSLL and reasonably possible, but not probable in the cases of PIS and COFINS, based on the technical merits. In the case of IRRF, the Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is remote. For that reason, the Company has not recorded any expense or liability for the disputed amounts.
Buyer protection program
The maximum potential exposure under this program is estimated to be the volume of payments on the Marketplace, for which claims may be made under the terms and conditions of the Company’s BPP. Based on historical losses to date, the Company does not believe that the maximum potential exposure is representative of the actual potential exposure. The Company records a liability with respect to losses under this program when they are probable and the amount can be reasonably estimated. See Note 2 – Summary of significant accounting policies – Provision for buyer protection program of these audited consolidated financial statements for further detail.
As of December 31, 2025 and 2024, Management’s estimate of the maximum potential exposure related to the Company’s buyer protection program is $7,953 million and $5,769 million, respectively, for which the Company recorded a provision of $19 million and $14 million, respectively.
Commitments
The Company has signed 5-year agreements with certain providers, under which the Company committed to purchase cloud platform and other technology services for a total minimum aggregate purchase commitment of $3,359 million. As of December 31, 2025, the remaining purchase commitment is $2,532 million.
The Company has signed a 10-year agreement with Gol Linhas Aereas S.A. under which the Company committed to contract a minimum amount of air logistics services for a total cost of $378 million (portion allocated to the services component of the agreement). As of December 31, 2025, the remaining purchase commitment is $291 million.
Since October 2023, the Company has signed 3-year agreements with certain shipping companies in Brazil, under which the Company committed to contract a minimum amount of logistics services for a total cost of $57 million. As of December 31, 2025, the remaining purchase commitment is $26 million.
As of December 31, 2025, the Company has lease agreements for new warehouses in Brazil, Mexico, Argentina and Chile for a total amount of $2,031 million that have not yet commenced. Lease terms under the agreements are between 4 to 16 years.
The Company has unconditional purchase obligations related to capital expenditures for a total amount of $34 million. As of December 31, 2025, the remaining purchase commitment is $6 million.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.