The second part of the regulatory framework for brazilian tax reform, introduced through Supplementary Law (LC) No. 227/2026, has brought significant changes to Brazil’s tax system. Among these changes are new rules for the ITCMD – Imposto sobre Transmissão Causa Mortis e Doação (Inheritance and Donation Tax), which applies to inheritances and donations.
This supplementary law introduced a new structure for tax system, altering material criteria, calculation base, rates, and other fundamental elements.
Here are the 5 key changes you need to know:
1. Progressive Rates: From now on, progressive tax rates will be the rule, potentially ranging up to 8%, depending on the total value of the inheritance or donation. Fixed rate models will no longer exist. In the state of São Paulo, for example, the previous rate was 4%; with this change, the rate may increase based on the value transferred.
2. Calculation Base: The supplementary law explicitly states that the tax will be levied on the market value of the transferred asset or right (no longer the book or declared value). This change also amended the National Tax Code to clarify that market value refers to the price at which the asset or right would be negotiated in cash under normal market conditions, estimated using technical criteria.
3. Assets Abroad: This topic was previously a source of much controversy, but the new supplementary law aligns with the changes introduced in the Federal Constitution, establishing that ITCMD will now apply to assets located abroad. This applies to both inheritances and donations, including cases where the ownership of assets or rights held in a foreign trust reverts gratuitously.
4. Uniformity Among States: A positive aspect of the new legislation is that the same rules will now apply across all states. States may also enter into agreements to standardize accessory obligations and methodologies for determining the ITCMD calculation base.
5. ITCMD on Real Estate: The tax will be owed in the jurisdiction where the property is located, even if the decedent or the donor resides abroad. For properties located abroad, the tax will be owed based on the domicile of the decedent or donor if based in Brazil, or the domicile or residence of the heir or donee if the decedent or donor resides abroad. In cases involving real estate located in more than one state, the tax will be owed to each state based on the market value of the portion of the property within its territory.
The changes introduced represent, in some respects, an increase in the tax burden for the succession and donation of assets and rights.
Preparing your property for succession also involves financial strategies to provide security for your heirs and avoid unexpected tax liabilities. For this, it is essential to plan succession with proper tax planning, identifying potential risks in advance. This preparation ensures that the succession process can proceed more smoothly and securely.
