The Second Panel of Brazil’s Superior Tribunal de Justiça (STJ), in Special Appeal No. 2,139,412 – MT, held that the Tax on Inheritance and Gifts (ITCMD) must be calculated based on the market value of real estate assets contributed to a family holding company, rather than on their book value as recorded in the balance sheet (net equity).
The Court’s reasoning was grounded in Article 38 of the Brazilian National Tax Code (CTN), which establishes that the tax base must correspond to the fair market value of the transferred assets and rights.
This decision directly impacts the wealth planning of families that use holding companies to facilitate succession, as, where the company is purely asset-holding and its primary assets consist of real estate, the market value of such assets will be used as the tax base for ITCMD.
In light of this understanding, it reinforces the need for wealth planning—especially structures involving family holding companies—to be conducted with more robust legal and tax analysis, given that the STJ’s case law points toward a stricter interpretation of business purpose.