The 3rd Chamber of Public Law of the São Paulo State Court of Justice ruled that the ITCMD (Causa Mortis and Donation Transfer Tax) should not be levied on donations of assets located in Brazil when the donors are resident or domiciled abroad.
In the case under discussion, the donor has not resided in Brazil since 2016, having chosen to donate the real estate and shareholdings she has in the country to her heirs.
The position is in line with the decision in Unconstitutionality Argument No. 0004604-24.2011.8.26.0000 and the understanding ratified in Extraordinary Appeal No. 851.108 (Theme 825). The STF, when considering the appeal, ruled that “Thestates and the Federal District are prohibited from instituting the ITCMD in the cases referred to in art. 155, §1, III, of the Federal Constitution without the intervention of the complementary law required by said constitutional provision.”
Thus, the tax could only be levied in the case of donations of assets located in Brazil by people living abroad if a complementary law was enacted.
The appeal analyzed by the TJSP has not yet become final, since the assessment will be taken to the STJ. However, this is an important decision for taxpayers who are resident or domiciled abroad and wish to carry out their succession planning.
Constitutional Amendment 132/2023, which approved the tax reform, included a rule to allow ITCMD to be levied in these cases, even without a complementary law. However, there are still a number of discussions on the subject, including the need for states to issue new legislation after the Constitutional Amendment in order to be able to charge the tax.
If you have any questions, our tax team is at your disposal for clarification and guidance.
