The Federal Supreme Court (STF) will soon rule on a crucial issue for succession and tax planning: the non-assessment of Real Estate Transfer Tax (ITBI) on the payment of share capital.
As is well known, ITBI is levied on the transfer of immovable property. However, the Federal Constitution stipulates that this tax does not apply to assets that are incorporated into the assets of a legal entity as part of a capital increase, nor to the transfer of assets or rights resulting from the merger, incorporation, spin-off or extinction of a legal entity, unless, in these cases, the acquirer's main activity is the purchase and sale of these assets or rights, the leasing of real estate or leasing.
The controversy revolves around the scope of the exception provided for in the Constitution - in particular, the phrase "unless, in such cases".
On the one hand, taxpayers argue that the nature of the company's activity should only be relevant in situations of merger, demerger, incorporation or extinction of legal entities, and not in the case of the payment of share capital. For them, ITBI immunity applies regardless of the company's main activity, as long as the purpose of the transaction is to pay in capital.
On the other hand, the municipal tax authorities argue that ITBI immunity does not apply to transactions carried out by companies whose main activity is real estate, including the payment of share capital. In other words, according to the tax authorities, immunity would only be restricted to transactions carried out by companies whose main activity is not real estate, such as industry or commerce.
Case law on the subject still fluctuates, with some decisions favorable to taxpayers and others to the tax authorities. In 2018, the STF ruled on a general repercussion issue (Topic 796), recognizing that ITBI is not levied on the value of assets used to pay up share capital. However, tax immunity does not apply to the value of assets that exceed the limit of the share capital to be paid in.
In recent decisions, some courts have adopted an intermediate position, arguing that for ITBI to be required, the real estate nature of the company's activity must be proven. Thus, case law continues to oscillate, and the STF's judgment could bring more legal certainty on the application of ITBI immunity in different contexts.
The STF's decision, which was analyzed as a matter of general repercussion, will have to be followed by all courts. If ITBI immunity is restricted, the implications for asset structuring and inheritance will have to be reviewed. Our firm is prepared to offer the necessary guidance on how this ruling may affect your operations and tax strategies, helping to optimize your succession and corporate planning in the face of changes in case law.
