Changes on the Transfer Tax – ITCMD SP :: PL 529/2020

On August 13th, Legislative Bill nº 529/2020 (“Bill 529/20”) was published, proposing changes on the transfer tax (“ITCMD”) legislation in the State of Sao Paulo. The purpose is to equalize the deficit from the negative effects of the COVID-19 pandemic on public revenue and recover part of the State’s investment capacity.

The main changes addressed by the PL 529/2020 include adjustments on the tax basis for transfers involving: (i) companies equity interest, since the proposed tax basis would consider the net equity value with the corresponding market adjustments for the assets and debts and (ii) both rural and urban real estate properties, in which case their tax basis would correspond at least to the value considered for ITBI, or in its absence, IPTU (other taxes over transfer or ownership of the property) and in the case of rural property, the value published by the São Paulo State Department of Agriculture and Supply or other competent public agency.

Another proposed change refers to ITCMD levy over gifts with usufruct. Even though ITCMD is currently levied over two thirds of the asset’s value on the gift and the remaining one third upon the consolidation of the usufruct, the proposed Bill states that ITCMD would be levied over the total value of the asset.

According to PL 529/20, the beneficiaries of supplementary pension plans (the so called “PGBL” and “VGBL”) would be subject to ITCMD.

This is the second Bill proposing changes in ITCMD in this year in the State of São Paulo. In view of the potential changes, it is important that Families review their succession planning.

Our team is available for any clarification you may need.