New property tax? Find out what could change at ITBI

The government has made a new rule change regarding the imposition of the Real Estate Transfer Tax (ITBI), which is a municipal and federal tax paid by the buyer of a property. This change appears in the second supplemental tax reform bill, which has already been sent to Congress and has drawn criticism from tax experts.

Lawyers claim that the new wording of the text still stipulates the expectation of collecting taxes, which contradicts the already consolidated court decisions. Therefore, they believe that this would be a step backwards, because it opens the way to new questions.

As the report showed, at the request of the mayors, the Ministry of Finance introduced the moment of ITBI charging, which today occurs when ownership is actually transferred. According to the Civil Code, this does not happen until after registration in the Land Registry, with a change in the registration of the property.

The draft project, which came out of the treasury and was transferred to the Civic House, opened the way for the city councils to carry out this task moments before the transfer: when signing the deed, which is a public sale and purchase contract – which is carried out in the presence of a notary – or in the assignment of the rights of possession of the property – Which happens, for example, when a person sells his right to buy a property that is still under construction.

This second hypothesis, which was strongly criticized by tax experts, was deleted from the text before it was sent to parliamentarians. However, the lawyers' assessment is that the project is still at high risk from the judiciary, as it contradicts what the Civil Code stipulates and what was decided by the Federal Supreme Court (STF) and the Supreme Court of Justice (STJ).

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In a ruling issued in February 2021, the STF came to the understanding that the event triggering the imposition of ITBI charges only occurs after the transfer of real property, which takes place through registration with a notary office. However, the court accepted the appeal filed by the municipality of São Paulo and will now reconsider the case. Currently, São Paulo legislation opens the possibility of payment at the time of act or upon transfer of rights.

The report stated that the request to include this section in the reform bill was led by the capital of São Paulo. The goal is therefore to move the São Paulo law into the federal sphere.

“It is an attempt to strengthen a situation that has already been questioned and rejected by the courts. “In other words, there is an attempt to circumvent the legal understandings on the subject through supplementary law,” says Breno Vasconcelos, researcher at Insper and tax specialist at Manrich y Vasconcelos Adfojados.

However, he believes that civil law concepts cannot be modified by tax rules, and that to do so, it would be necessary to change the constitution and the entire logic of civil law, which requires registration of the title deed for transfer. Properties.

Daniel Cardoso Gomez, partner at Amatuzzi Advogados and specialist in the field of real estate law, estimates that the project leaves the ITBI scenario more confusing, opening up a large margin for judicial legislation. “The project characterizes the triggering event (for tax collection) before it actually happens,” he says. “It is a major setback. All these discussions will be born again.”

For the Secretary of the National Front of Mayors (FNP), Gilberto Peri, the government's exclusion of part of the ITBI article does not significantly change what was already defined in the draft. In other words, in his understanding, the current wording still states that the tax will be imposed on the act of signing the public deed, or its equivalent, for the purchase and sale of property. He says: “The deletion does not change, because the second clause (which was deleted) is present in the first clause, which was preserved.”

Information from the newspaper State of San Paulo.