The change will affect most states in the union. Currently, only a few states have progressive ITCMD fees. Rio de Janeiro is one of them. In São Paulo, the rate is 4%, regardless of the value of the assets. With the reform in its current form, the rate could reach 8%.
Once the tax reform is approved, Brazilian states must amend their laws to implement the progressive system..
Luciana Toledo Nice, Family Law Specialist.
Fees will be determined by the deceased's place of residence. With the change, the heir cannot determine where the inventory will be opened when the assets are transferred. Until then, the strategy has allowed people to run away in search of lower prices.
The reform would standardize the application of progressivism across all states, eliminating the practice of changing tax addresses for states with low tax rates.
Pedro Persichetti, Succession Planning Specialist at Sail Capital
Proposals in Congress call for higher tax rates. Although the cap is set at 8%, there are discussions to increase the rate. “There are several bills in parallel that seek to increase the constitutional cap, up to 20% and greatly expand the chances of an ITCMD occurring,” says David Andrade Silva, a tax law specialist.
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Families jump ship to avoid new tax rates. With the possibility of changing the rules, many taxpayers have organized themselves to make donations during their lifetime in anticipation of succession planning. “2024 is seen as the last opportunity to take advantage of the current ITCMD rules,” predicts Consoli. Among succession strategies, Persichetti cites the creation of family holding companies and the use of instruments such as private pensions and life insurance.
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