São Paulo City Hall has expanded its use of coercive measures to ensure the collection of taxes such as IPTU (Urban Property Tax) and ISSQN (Tax on Services) in real estate regularization processes.
In many cases, measures are applied inappropriately, conditioning taxpayers to pay taxes in order to subsequently issue documents or allow activities to continue, even if these are not directly related to the taxpayer’s request.
Abusive practices and the reaction of the judiciary
A common example is the requirement to pay taxes in order to issue the “Habite-se”, a document that certifies the completion of a construction project and the regularity of the property. However, this practice is considered illegal, since it goes beyond the mechanisms that the public administration has for collecting taxes, such as tax execution, protest or asset seizure.
The Courts, recognizing the illegality of these measures, have ruled against their application, ensuring that administrative proceedings follow their natural course, without the taxpayer being forced to pay taxes or prove their tax compliance in advance. In a recent case, the 18th Chamber of Public Law of the São Paulo Court of Justice (TJSP) ordered the issuance of the Habite-se without requiring the prior payment of ISSQN.
The importance of legal advice for taxpayers
São Paulo City Hall has also been adopting such coercive practices in the amnesty processes provided for in Law 17.202/2019, which regulates the regularization of buildings in the Municipality of São Paulo.
In a lawsuit recently filed by a taxpayer in the services and entertainment sector, an injunction was granted by the judge of the 3rd Public Finance Court of the Capital District, guaranteeing the continuity of the administrative process to regularize the areas built by the taxpayer, without the need to link the issuance of the regularization certificate to the payment of any taxes.
This trend reinforces the importance of taxpayers being well advised legally, avoiding abuses and ensuring that their rights are preserved in the regularization processes before the Municipal Authority.
If you have any questions, our tax team is at your disposal for clarification and further guidance.
