Brazilian Supreme Court rules unconstitutional the levy of ITCMD on PGBL and VGBL plans

More details

The case in question dealt with the constitutionality of ITCMD levy on amounts and rights relating to VGBL and PGBL plans in the event of the death of the policy holder. Initially, the Court of Justice of the State of Rio de Janeiro declared that the levying of ITCMD on the VGBL was unconstitutional, but upheld its constitutionality for the PGBL. The discussion was taken to the STF, where Justice Dias Toffoli analyzed the arguments and precedents of other courts, including decisions from Superior Court of Justice (STJ) and state courts.

Discussion addressed

The main issue discussed was whether the amounts received by the beneficiaries of VGBL and PGBL plans in the event of the death of the policy holder would be qualified as a causa mortis transfer, subject to ITCMD, or whether they would be contractual rights that should not be taxed as an inheritance.

The main arguments for ruling out taxation, according to the vote of Justice Dias Toffoli, were:

VGBL

• Life Insurance Nature: The VGBL is classified as personal insurance by Susep and the CNSP. The Civil Code establishes that the capital insured in life insurance is not considered an inheritance and is not subject to the insured’s debts (art. 794 of Brazilian Civil Code).
• Contractual Law: The amounts received by the beneficiaries derive from an insurance contract and not from a transfer of the deceased’s assets. Therefore, they do not qualify as causa mortis transfer.
• Precedents: STJ, in other judgments, has recognized the insurance nature of the VGBL, ruling out the levy of ITCMD. Examples include REsp nº 1.961.488/RS and other similar cases.

PGBL

• Complementary Pension Plan Nature: Although classified as a complementary pension plan, the PGBL also has life insurance characteristics, especially in the event of the holder’s death.
• Contractual Law: As with the VGBL, the amounts received by PGBL beneficiaries are the result of a contract and not an inheritance. Article 79 of Law 11.196/05 reinforces that these amounts can be received regardless of whether an inventory is opened.

Proposed Thesis

• The thesis proposed by Justice Dias Toffoli and accepted by all the other Justices was that: “It is unconstitutional the levy of gift and inheritance tax (ITCMD) on the transfer of amounts and rights related to the VGBL or the PGBL to the beneficiaries, in the event of the death of the plan holder (free translation)“