The Federal Supreme Court (STF) will determine whether it is constitutional to require donors to pay personal income tax (IRPF) in addition to the tax on transfers by death and gifts (ITCMD), which is already levied on advance payments of a statutory share.
According to the Federal Revenue Service, IRPF is levied on the difference between the market value of the asset on the date of the gift and its acquisition cost, as it considers this difference to be a taxable capital gain, even if the donor receives no consideration for the transfer.
The courts, on the other hand, have recognized that a donation cannot be equated with a sale for the purposes of personal income tax, since it does not generate financial income or economic benefit for the donor.
Given the divergence and the significance of the issue, the general repercussion of RE 1.522.312, Topic nº. 1391, with Justice Gilmar Mendes serving as reporting judge, was recognized. The ruling will determine whether the collection of IRPF from the donor, combined with the ITCMD, is constitutional.
Regarding this issue, we highlight 3 points of attention:
1. Taxation today is cumulative: IRPF on the donor and ITCMD on the donation: The ITCMD is levied on the total value of the transferred asset as a state tax on the gratuitous transfer of assets. The IRPF, collected by the Federal Revenue Service based on the appreciation of the same asset, is levied on the same economic transaction. In practice, a donation made in advance of a statutory share ends up being subject to two tax burdens on a single asset-related event.
2. The fundamental issue is whether there is taxable income for the donor: Article 43 of the National Tax Code conditions the imposition of income tax on the acquisition of economic or legal availability of new wealth. In a donation, the donor receives nothing in exchange and merely reduces his or her assets, which supports the argument that there is no taxable event for personal income tax (IRPF), but only a gratuitous transfer, already taxed by the ITCMD. The collection of personal income tax is based on Article 3, paragraph 3, of Law 7,713/88, and Article 23, paragraphs 1 and 2, item II, of Law 9,532/97, an interpretation reaffirmed by Cosit Consultation Ruling nº. 66/2020. Thus, the central issue of the controversy is whether the appreciation in value of the donated asset can be considered a taxable capital gain, even in the absence of financial inflow or economic availability for the donor.
3. Until a final ruling is issued, administrative collection proceedings continue, and the courts are the proper venue for challenging them: The Federal Revenue Service maintains its IRPF assessment until a final ruling is issued on Issue No. 1391. Taxpayers who wish to avoid this collection and pay only the ITCMD must file a separate lawsuit, and there are already decisions by panels of the Federal Supreme Court (STF) and lower courts in favor of this position.
Double taxation burdens advance gifts of statutory shares and increases the cost of estate planning transactions.
The possibility of paying only the ITCMD therefore depends on an analysis of the feasibility of filing a separate lawsuit, taking into account the current state of case law and the specific details of each transaction. For families and companies with ongoing estate planning, this assessment is crucial for reducing tax exposure and providing greater certainty regarding the structure adopted.
