The Chamber of Deputies recently approved the new text of Complementary Bill (PLP) 108/2024, after voting on the amendments suggested by parliamentarians.
One of the amendments accepted by the House of Representatives removed the levy of ITCMD (Tax on Causa Mortis Transmissions and Donations of any assets or rights) on supplementary pension plans – Free Benefit Generator Life Plans (VGBL) and Free Benefit Generator Plan (PGBL),
Case law has been debating the nature of private pension plans for a long time, and this definition has a significant impact on whether or not ITCMD is levied on the amounts received by plan beneficiaries.
What is ITCMD?
ITCMD is a state tax levied on the transfer of assets and rights, whether through inheritance or donation. It is important to note that the obligation to pay falls on the beneficiary, i.e. the person who receives the goods or rights.
The issue took on a new shape after the debate reached the STF, which, in the context of general repercussion, created Theme 1.217 to define whether or not ITCMD is levied on VGBL and PGBL plans in the event of the death of the plan holder.
At the time of publication, the trial had been suspended with a request for a rehearing by Justice Gilmar Mendes, but the score was already three votes in favor of the taxpayers. At the time, the Reporting Justice argued that the amounts received could not be interpreted as an inheritance, but that they functioned as a kind of life insurance, which would rule out the existence of an inheritance right, subject to taxation by the ITCMD.
Now, with the approval of the Chamber of Deputies to remove the provision for ITCMD to be levied on these private pension plans (VGBL and PGBL), the taxpayer gains more legal certainty about the definitive removal of the tax in these cases.
The issue will be decided by the Federal Senate, with no date set yet, which may not be until 2025, but taxpayers should keep an eye on the next developments in the case.
Questions?
If you have any questions, our Tax team is at your disposal for clarification and guidance.
