The changes introduced by Complementary Bill 108/2024 significantly modify the tax base of the Tax on Causa Mortis and Donation Transfers of Property and Rights (ITCMD), impacting estate and succession planning.
By Larissa Moreira
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Legale Overseas, no. 960.
The Brazilian Federal Senate approved, on September 30, 2025, the Complementary Bill (PLP) 108/2024, which, among other measures, establishes national regulations for the Tax on Causa Mortis and Donation Transfers of Property and Rights (ITCMD), marking a decisive step in the proposed changes to the taxation of inheritances and donations in the country.
Current legislation in the State of São Paulo provides several ITCMD exemptions and an attractive tax base, making donation transactions more advantageous for estate and patrimonial planning. However, Complementary Bill 108/2024, which is still awaiting approval by the Brazilian Chamber of Deputies, introduces a very different framework.
The ITCMD will adopt progressive rates based on the value of the inheritance share, legacy, or donation, subject to the maximum rate to be determined by the Brazilian Federal Senate. Currently, in the State of São Paulo, the ITCMD applies a flat 4% (four percent) rate.
With respect to the ITCMD tax base, it will no longer be calculated based on the property’s taxable value but instead on its market value, with the aim of ending disputes between taxpayers and the tax authorities.
This point warrants particular attention when considering estate and succession planning through holding companies. Under current São Paulo law, the net equity value may be used as the ITCMD tax base for the transfer of shares, quotas, equity interests, or any instrument representing corporate capital. However, Complementary Bill 108/2024 changes this methodology for the transmission of quotas and shares, establishing that the ITCMD tax base must be calculated as follows:
(a) for publicly traded companies: market value; and
(b) for privately held companies: a reliable valuation methodology will be required, corresponding at a minimum to the net equity value adjusted to market value and increased by goodwill, when applicable.
In light of this, it is important to assess whether advancing the transfer of equity interests prior to the entry into force of the new ITCMD rules may reduce the financial impact of such transactions.
Finally, the bill introduces a new taxable event involving trusts and foreign arrangements with characteristics similar to trusts—something that did not exist under current Brazilian law.
As demonstrated, the ITCMD has undergone significant changes that will affect transactions carried out by both individuals and legal entities, making specialized and up-to-date legal guidance essential during this transition period.
Vaz de Almeida Advogados is closely monitoring the changes brought by the Tax Reform, combining technical expertise with strategic insight to support companies as they adapt to this new tax framework.
Translation Disclaimer
This document was originally drafted in Portuguese and subsequently translated into English using artificial intelligence (AI).
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