Tax on inheritance and donation received from overseas raise doubt to taxpayers

When the inheritance or donation comes from another country, the beneficiary often has doubts.

28/10/2019

HIGHLIGHTS

Tax on inheritance and donation received from overseas raise doubt to taxpayers


Receiving inheritance and giving is unlikely often throughout life. Therefore, the accounting process for these benefits often raises doubts. If, in addition, the inheritance or donation comes from another country, more questions are added to the case.

Find here are some clarifications on the subject.


How is the payment of inheritance tax or donation?

Funds from inheritances or donations are exempt from income tax, but are subject to the payment of taxes to the states where the beneficiaries reside.

The responsibility of the states is established in the Federal Constitution, in its article 155.


What about the goods left overseas?


For the assets left overseas, the paragraph 1, item III, items “a” and “b”, sets that it is upon the complementary law to rule the responsibility for setting and collecting of the Tax on causa mortis transmission and donation of any property or right ("ITCMD").

However, so far, no complementary laws have been enacted to regulate the subject, creating, thus, room for legal discussion and legal uncertainty.

The Federal Supreme Court has already recognized the general impact of the issue in the judgment of an Extraordinary Appeal that is currently in progress, that is, there is no definition of the tax burden, nor its calculation methodologies and terms.

In turn, states have enacted laws that provide for the ITCMD and provide for the collection of tax even when the inheritance or donation is processed (from) abroad. This means that the beneficiary's state of residence is the responsible for charging the tax.

If the donor/de cujus resident in Brazil and the beneficiary abroad, payment of the tax will be due to the donor's state of residence and/or the inventory process.


What are the charged rates in the states?


The rate varies according to the legislation of each state, but is limited to 8% (Federal Senate Resolution 9/1992).

We list the ITCMD charged in the states of Rio de Janeiro and São Paulo as an example:

 

Rio de Janeiro

Legal Act:

Law 7,174/2015

UFIR Value:

BRL 3.2939

Rate

UFIR Values

Amounts in BRL

4%

Up to 70,000

BRL 230,573.00

4.50%

Over than 70,000 and up to 100,000

Over than BRL 230,573.00 and up to BRL 329,390.00

5%

Over than 100,000 and up to 200,000

Over than BRL 329,390 and up to BRL 658,780

6%

Over than 200,000 and up to 300,000

Over than BRL 658,780 and up to $ 988,170

7%

Over than 300,000 and up to 400,000

Over than BRL 988,170.00 and up to BRL 1,317,560.00

8%

Over than 400,000

Over than BRL 1,317,560.00

 

Sao Paulo

Legal Act:

Law 10,705/2000

UFESP Value:

BRL 25.70

Rate:

4%

 

 

The beneficiary (heir or donee) is the taxpayer, except for specific cases provided for by law.


Advice ensures peace of mind to the individual taxpayer


Domingues e Pinho Contadores warns its clients to discuss with their legal advisors the above mentioned legal debate, but recommends the payment of ITCMD to the states in order to comply with state laws on the issue, always respecting the limits of exemption, non-levy and/or other aspects that may influence the tax payable result.

In turn, DPC supports the taxpayer in the registration procedures of the donation and issuance of the ITCMD payment form.

In addition to these punctual services, DPC offers a complete set of solutions that guarantee the peace of mind to domestic and foreign individuals to meet their tax obligations, in compliance with Brazilian law.

How DPC may help your company?

Domingues e Pinho Contadores has specialized team ready to assist your company.
Contact us by the e-mail dpc@dpc.com.br

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