In recent times, a series of changes to Brazilian tax legislation have highlighted the importance of succession and estate planning. One of these changes is the transition of states that previously adopted fixed rates for the Causa Mortis and Donation Transfer Tax (ITCMD) to a progressive model. This means it’s time to act, as the deadline for taking advantage of the fixed rates is running out.
States that have fixed ITCMD rates regardless of the value of the inheritance or donation (such as São Paulo, Minas Gerais, Goiás and Paraná, among others) will be forced, with the tax reform, to adopt progressive rates, which vary according to the amount transmitted, limited to 8%, the ceiling for collecting the tax under the terms of Resolution No. 9/1992 of the Federal Senate.
For example, in São Paulo, where the single rate of 4% is currently applied, there is already a bill pending before the São Paulo State Legislative Assembly (Alesp). Bill No. 7/2024 (PL 7/24), authored by state deputy Donato (PT), aims to replace the current fixed ITCMD rate with rates ranging from 2% to 8%, depending on the value of the inheritance or donation.
–> Find out more about the Bill currently before the São Paulo State Legislative Assembly by clicking here.
Of course, if the states’ bills to implement this change are approved and converted into law later this year, the effectiveness of the new rates introduced will have to comply with the principles of annual and non-agesimal anteriority, so that the proposed changes will come into force from 2025, and provided that the 90-day period from the date of publication of the law has elapsed. Therefore, any transfers of assets by way of inheritance or donation made in those states with single tax rates will still be subject to the current rule, regardless of the amount transferred. After that, they will have a substantially higher tax cost for the heirs.
Faced with this situation, it is crucial that families act quickly to ensure that their assets are protected in the best possible way. Such changes require a thorough study by lawyers and consultants specialized in the area of succession and estate planning, which can take some time depending on the particularity and complexity of the analysis. It is therefore important that people act before the changes come into effect.
Succession and estate planning is the key to minimizing the tax burden and ensuring a smooth transition for heirs. Strategies such as drawing up wills, using donations and creating corporate structures can help reduce tax impacts and guarantee the preservation of family assets.
So if you haven’t done your succession planning yet, it’s time to act. The deadline is running out and it’s important to ensure that your assets are protected in the best possible way. Don’t put it off, start planning now to guarantee your family’s future.
