The Federal Supreme Court (STF) resumes, this Friday (6), the vote regarding the incidence of the Causa Mortis and Donation Transmission Tax (ITCMD) on transfers to private pension beneficiaries in the event of the death of the holder.
The analysis, which will be carried out in the virtual plenary between today and the 13th (Friday), will decide whether the ITCMDa state tax, can be charged on the two types of private pension plans in operation in the country: the Free Benefit Generator Plan (PGBL) and Free Benefit Generator Life (VGBL).
Tax rates vary by federation unit — in São Paulo, for example, it is a single rate of 4%, but the maximum, according to a Senate resolution, cannot exceed 8%. In Brazil, just over 15 million families have some type of private pension plan managed by insurance companies.
The issue began to be decided in August, when the rapporteur, Minister Dias Toffoli, voted for the unconstitutionality of charging the tax in these cases — he was accompanied by ministers Alexandre de Moraes and Flávio Dino. But the trial was suspended due to a request for review (longer time to analyze a case), from Minister Gilmar Mendes, which lasted until the first week of November.
“Currently, there is no uniformity between states regarding the charging of ITCMD in these cases”, says João Henrique Gasparino, partner at Grupo Nimbus. “Some states understand that VGBL, as it is similar to life insurance, would not be subject to ITCMD, while PGBL could be taxed as it has more social security characteristics.”
For the expert, until there is a definitive decision from the STF, the ITCMD charge on private pension plans remains uncertain. “If the STF decides that the charge is unconstitutional, this could prevent states from taxing these amounts, even if there is a state law providing for the charge.”
READ MORE: ITCMD: How to calculate and declare inheritance tax
Taxation would occur at the moment of the holder’s death and the transfer of the amounts to the beneficiaries indicated by him. Today, this transfer is tax-free like the ITCMD. In other types of transfers to heirs, such as investments in investment funds or CDBs, the ITCMD is charged.
“ITCMD is a state tax that is levied on the transfer of assets and rights by inheritance or donation”, highlights Morvan Meirelles Costa Junior, founding partner of Meirelles Costa Advogados.
The rate varies from state to state, reaching up to 8%, always calculated on the totality of assets transmitted as an inheritance or the value of the donation. In São Paulo, particularly, this rate is, for now, fixed at 4%, with a bill currently being processed in the State Legislative Assembly providing, as permitted by EC 132/2023, its progressive incidence at rates of up to 8%.
“In some states, private pension amounts may be subject to ITCMD according to local legislation, especially if they are considered investments and not insurance, which is generally the subject of judicial challenge, including under the approval of the STF. The ITCMD must be paid by the heir or beneficiary who receives the assets or rights”, says Meirelles.
READ MORE: Will VGBL and PGBL pay tax?
STF x Congress
If the STF understands that charging ITCMD on social security transfers is unconstitutional, another text that addresses the same issue, but in Congress, will lose strength.
PLP 108/2024 is part of the second regulatory phase of the Tax Reform and was approved in November in the Chamber of Deputies. The idea is to standardize the collection of taxes by the states, considering the history of disputes and approval of the impossibility of this incidence according to the current tax legislation by the STF, avoiding, according to Congress’ justification, abusive succession planning. The project went to the Senate and is still awaiting a vote.
The project provides that amounts invested in VGBLs for more than five years will be exempt from ITCMD. This measure is intended to benefit those who use these plans for long-term retirement, and not just for succession planning.
“In the case of PGBL, unlike VGBL, the amounts invested would not enjoy any exemption, regardless of the investment period. This means that ITCMD will be due on these plans”, says Meirelles. “These discussions are important to define the future of taxation on private pension plans in Brazil and can have a significant impact on families’ succession and wealth planning.”
It is worth remembering that, in the first phase of the Tax Reform, the text approved by the Chamber created the progressive ITCMD rate and the taxation of amounts received abroad, among other points, which still require a complementary law to become valid.
