The intersection of several areas of law to ensure well-structured and legally secure estate and succession planning is not new. For instance, the fiscal analysis, one of the most relevant pillars of this work. With the recent approval of the Tax Reform by the Chamber of Deputies, it is expected a direct impact of such changes in the structuring of estate and succession planning.

We list below the most relevant topics of Tax Reform in these cases.

• PROGRESSIVE TAXATION OF ITCMD/ITD/ITCD

The ITCMD, ITCD or ITD, is the tax levied on the transmission of assets and rights as a result of death (inheritance) or free transfer of rights (donation) and its nomenclature may vary, depending on the state.

The tax will be levied on the value of the assets received, so that each heir (or donee) is responsible for the payment of their respective share.

In addition, the values of the assets will have as a base date the death of the author of the inheritance or the date of the donation.

The states have autonomy to legislate on the form of incidence, basis of calculation and value of the rate, in which the maximum is 8%, according to Federal Senate Resolution No. 09, of 1992.

The Tax Reform, despite maintaining the maximum rate at 8%, requires all states to institute a progression in the tax rate.

Consequence: states in which there is no provision for progressivity of the rate will have to modify their legislation to comply with the determination.

Some states already charge this tax in a staggered/progressive way, depending on the value of the goods transmitted, such as Rio de Janeiro and Santa Catarina, while others determine a fixed rate, as is the case of São Paulo and Minas Gerais.

• STATE COMPETENT FOR COLLECTION OF ITCMD/ITD/ITCD IN PROBATE PROCEEDINGS

Currently, inheritance tax is collected in the state in which the probate is processed, except in relation to immovable property,  in which tax must be collected at the place where the property is.

After the Tax Reform, the competence to collect the tax will be the state in which the deceased was domiciled, maintaining the exception for immovable property, in which the tax to be collected will be from the state in which the property is located.

Consequence: impossibility of collecting the tax based on the state legislation of the place where the probate is processed,  applying the laws of the state of domicile of the author of the inheritance, instead.

• INCIDENCE OF TAX ON INHERITANCES AND DONATIONS ABROAD

Currently, there is no taxation of the inheritances of:

• assets located abroad;
• deceased with residence abroad; and
• probate processed overseas.

This is because the Federal Supreme Court (STF) decided that the collection of ITCMD / ITD / ITCD is unconstitutional in relation to donations and inheritances instituted abroad, since the states and the Federal District would not have the competence to apply such taxation, due to the absence of a national complementary law to regulate the matter.

The Tax Reform provides rules for the incidence of the tax in the aforementioned situations (until the edition of a national complementary law. They are:

Donation:

• If the donor has domicile or residence abroad, the à competence of the state where the donee is domiciled.
• If the donee is domiciled or resides abroad, the à competence of the state in which the property is located.

Inheritance:

• Jurisdiction of the state where the author of the inheritance was domiciled.
• If the deceased was domiciled or resident abroad, the à competence of the state where the heir or legatee is domiciled.
  
  

• CURRENTLY	AFTER THE REFORM
  There is no taxation	Even without the edition of the complementary law, there will be incidence of ITCMD in relation to inheritance / donation abroad andthe competent state is indicated above.
  Texto do corpo	Texto do corpo
  Rodapé	Rodapé

Consequence: taxation on assets located abroad, deceased persons abroad and probate processed abroad.

Therefore, significant changes in taxation may occur with the Tax Reform and should be taken into account both in the review of existing structures and in future planning.