Tax | Tax Planning: International Inheritance and Donations

The Donation transfer tax cannot be levied on companies and people domiciled in Brazil if the donor is resident abroad, as recently decided the Brazilian Supreme Court (STF).  

The Inheritance tax also cannot be levied when a deceased person owned assets, was a resident or domiciled or had their inventory processed abroad. 

The transfer tax (by donation or inheritance) is known as ITCMD is levied by states, with rates that can reach 8% of the equity. The tax covers transfers of property, money, social quotas, credit rights and assets in general. 

The decision will only be valid from now on, except for those taxpayers who had already filed lawsuits discussing the collection of the tax, who can be benefitted for the past. However, there is an essential aspect at stake: although the tax can no longer be imposed, this may change in 2022, if the failure in its legislation is remedied. 

In other words, it is possible that the ITCMD is due in donations and inheritances from abroad as early as next year. 

With the decision, tax planning became even more interesting for those who are or can become domiciled or resident abroad or set up a company with headquarters abroad. 

Each person can reevaluate their long-term strategy analyzed by family offices, corporate investors, private investors, and even equity holders. But it is extremely important to act quickly and analyze the situation from a tax point of view, considering December/2021 as the deadline.

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