Tax | Tax Planning in Brazil Involving International Donations and Inheritance Tax Refunds

A recent decision by the Brazilian Supreme Court confirms the possibility of a significant reduction in taxation on international donations, and also allows taxpayers to seek reimbursement of what may have been unduly paid.  

The possibility of tax planning can be taken advantage of by people who have some connection abroad, but have potential beneficiaries in Brazil. The ruling states that the donation tax (ITCD) is no longer levied on the transfer of goods and rights in favor of companies and persons domiciled or residing in Brazil made by a donor domiciled or residing abroad or a company headquartered abroad.  

This can benefit those who are, will become or have the possibility of being resident or domiciled abroad. Likewise, it can favor those who have or can set up a heritage company headquartered abroad.  

 However, there is a sensitive issue: although the tax can no longer be demanded, this could change from 2023, if both a federal and a state law is enacted to that effect.   

The tax on donations is levied by the States, at rates that can reach 8% of the patrimony, and covers practically any asset or right – from money, movable and immovable assets to equity interests and credit rights. 

The possibility of refunding the amount paid from 20/04/2021 was also guaranteed. That is, all those who made payments of this tax under these conditions can seek reimbursement. This decision also applies to another case, the so-called “inheritance tax” (ITCM). When the deceased person owned property, was resident or domiciled or had his inventory processed abroad, the tax should also not be levied. And the same request for refund of the amount is valid if it was paid from 20/04/2021.


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