ITCMD: Brazil Inheritance and Gift Tax

ITCMD: Brazilian inheritance and gift tax

ITCMD (Imposto sobre Transmissão Causa Mortis e Doação) is the state tax that hits assets when they change hands through death (causa mortis) or a gift. What you pay is figured on the market value (valor venal) of the asset, and the rate depends entirely on which state you're in. São Paulo keeps it simple with a flat 4%. Rio de Janeiro runs progressive bands from 4%–8%, Minas Gerais sits at 5%, Rio Grande do Sul goes 3%–6% on a sliding scale, and Santa Catarina stretches from 1%–8%. So an estate worth R$ 1,000,000 in SP comes to R$ 40,000 in ITCMD. Federal Senate Resolution 9/1992 sets the ceiling at 8%, and Constitutional Amendment EC 132/2023 (the tax reform) made progressivity mandatory across the country. The STF has repeatedly ruled that progressivity passes constitutional muster.

Applications and context

You'll run into this in probate proceedings (inventário), in succession planning built around patrimonial holdings (transferring quotas can bring down the effective ITCMD burden), at notary offices (tabelionato), and in everyday legal work. Whether to give assets away during your lifetime or leave them as inheritance is one of the bigger decisions here. Donating early can lock in today's rates before progressivity ratchets up further under EC 132/2023.

FAQ

Why do rates differ between states? ITCMD belongs to the states (CF art. 155, I), so each one writes its own rate as long as it stays under the federal 8% ceiling.

Is progressivity mandatory now? Yes. EC 132/2023 made progressive ITCMD obligatory, and states that haven't switched over yet are expected to fall in line.

Does ITCMD apply to life insurance? No. Under current case law, life insurance paid out to beneficiaries is exempt from ITCMD.