The São Paulo Court of Justice (TJSP) published a significant decision in the field of tax law, establishing that the Real Estate Transfer Tax (ITBI) does not apply to the transfer of real estate resulting from a corporate merger.
The decision, which reinforces the understanding of tax immunity in this context, has significant implications for corporate operations involving real estate.
In the case analyzed by the TJSP, a company incorporated another company, implying the transfer of real estate to the incorporator. The central question was whether ITBI should be applied to this transfer.
The developer, arguing that the tax should not be levied, argued that the transaction did not fall within the conditions laid down in Article 156, II of the Federal Constitution, which defines the situations in which the tax is levied.
According to the interpretation of the Constitution, ITBI is levied on transactions involving the transfer of real estate between living persons, for a consideration. However, the incorporation of one company by another is not characterized as an onerous transaction of real estate, but rather as the absorption of the assets of the incorporated company in their entirety, including real estate.
In addition, article 37, paragraph 4, of the National Tax Code (CTN), which establishes the requirement for ITBI when the acquiring legal entity’s predominant activity is the sale or rental of real estate, was considered inapplicable in this context.
This is because the transfer of assets or rights is carried out together with all the assets of the selling legal entity, and not in isolation.
In the final decision, the TJSP upheld the ruling in favour of the developer, recognizing that the nature of the operation of incorporating the whole of a legal entity does not constitute an onerous transaction subject to ITBI.
The ruling emphasizes that although the developer is a company whose main activity involves buying, selling and leasing real estate, the incorporation operation aims to simplify the corporate and operational structure, with unification of management and no increase in capital.
This decision by the TJSP is an important milestone for tax law, as it provides legal clarity in incorporation operations, enabling companies to better manage their real estate and corporate strategies. It highlights the importance of understanding the nuances of tax law in order to carry out efficient and legally secure corporate operations.
If you have any questions on the subject, our tax team is available to answer them.
