Tiago Aparecido da Silva
Lawyer at Marcos Martins Advogados
In Brazil, the tax due in the event of death is the Causa Mortis and Donation Transfer Tax – ITCMD, which, depending on the state, can be up to 8% of what is inherited.
This tax, payable by the heir, is calculated on assets and rights representing the assets or capital of a company, such as a share, quota, share, civil or commercial participation, national or foreign, as well as corporate rights, debentures, dividends and credit of any kind.
Although São Paulo currently has a law pending sanction, capable of giving it the title of the state with the lowest inheritance tax (Bill No. 511/2020), reducing the ITCMD to 0.5% in cases of donation and 1% in transfers on death, it is clear that the cost of this tax is still considerable.
By way of comparison, in the states of Goiás and Tocantins, the amount varies between 2 and 8%. In Santa Catarina, between 1 and 8%. In Rio de Janeiro, between 4 and 8%. In Minas Gerais, it’s 5%. And the trend is for this scenario to become even more serious, given the current movement to raise inheritance tax.
There is currently a Senate Resolution Bill (PRS no. 57/2019), which provides for an increase in the maximum rate to 16%, as well as a Complementary Bill in the Chamber of Deputies (PLP no. 37/2021) which will regulate the collection of ITCMD on assets and respective rights abroad.
In addition, there are some politicians who defend the idea of raising this rate even higher, using the way inheritance is taxed in other countries as justification.
To give you an idea, according to a survey by the Tax Foundation, Japan charges a rate of 55%, South Korea 50%, France 45%, the United States and the United Kingdom 30%. These percentages are much higher than those charged in Brazil.
However, only those who fail to analyze all the available options become hostages to these increases, because it is possible to mitigate the impacts of ITCMD on the inheritance received, effectively and based on the laws in force.
This requires prior planning. In other words, succession planning, which will involve an individualized study of the family structure and assets.
In this way, it is possible to present a suggestion for reorganizing the assets and rights that will be passed on to the heirs in order to obtain a reduction or even exemption from the ITCMD.
There is no predetermined recipe, what you have are rules to be applied according to each reality and thus ensure greater tax efficiency in the succession. The support of specialized professionals is essential for the family to find the best options available.
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