At the end of February, the Federal Supreme Court (STF) decided, with general repercussion, thus enforcing the decision throughout the country, for the non-incidence of Inheritance and Donation Tax on assets located abroad. In the specific case, the Brazilian taxpayer received as a donation, a real estate and money located in Treviso, Italy, and, subsequently, he was assessed by the State of São Paulo in the sense that the ITCMD would be due in this donation abroad. The STF, however, understood that such tax would not be applicable. This was not a unanimous decision, nor was it a simple one.
The discussion revolved around the competence of States to demand this tax in the inheritance and donation tax of real estate and their respective rights, as well as of assets, securities and credits, even when they are located abroad.
Ministers Alexandre de Moraes, Carmen Lúcia, Luiz Fux and Gilmar Mendes voted in favor of the collection of such tax, under the argument that given the failure of the national legislator to establish the general rules related to the competence to impose the tax in the aforementioned cases, the Brazilian States could use of their legislative competence to impose the taxes. On the other hand, Ministers Dias Toffli, Luis Roberto Barroso, Rosa Weber, Nunes Marques, Ricardo Lewandowski, Marco Aurélio and Edson Fachin voted against such requirement.
In general terms, the winning vote was based on Article 155, § 1, III, of the Federal Constitution, which requires the issuance of a complementary law to regulate cases in which the donor has domicile or residence abroad or if the owner of assets is resident, domiciled, or has their inventory processed abroad. This provision, in addition to avoiding potential conflicts between the States of the Federation, reduces conflicts of jurisdiction of an international nature.
The decision is valid as of the publication of the decision, with the exception of lawsuits pending completion, provided that they deal with (i) the jurisdiction over the collection of the ITCMD and (ii) the validity of the collection of such tax.
With this favorable result, all 22 States of the Federation that have legislation allowing the collection of ITCMD for cases of donation or succession of assets abroad can no longer carry out the collection until there is a complementary law approved by National Congress supporting this requirement.
The states of Roraima, Rio Grande do Norte, Paraíba, Alagoas and Sergipe do not have in their legislation these transactions abroad as tax-generating facts.
The disappointment that remains is for those who, in good faith, paid the tax in the past and will not be able to claim a refund of these amounts.
By Maria Paula Carvalho Molinar, associate at Candido Martins Advogados.
To learn more about this subject, please access the link below with an article in Portuguese that was published in the Folha de São Paulo newspaper, which included the participation of our partner, Tatiana Chiaradia