ITBI Exemption in the paying in of share capital
In a bulletin produced by our Tax Law team, we talk about the new developments on the exemption of ITBI in the operation of payment of share capital. Access our complete material and learn more.
In the judgment of Extraordinary Appeal No. 796.376/SC (Theme 796), the Federal Supreme Court (STF) established the thesis that “The exemption of ITBI, provided for in item I of § 2 of art. 156 of the Federal Constitution, does not impact the value of the assets that exceeds the limit of the share capital to be paid in”.
Although this is not part of the thesis itself, Justice Alexandre de Moraes, rapporteur of this case, expressly stated in his opinion that ITBI exemption in the transfer of real estate for the purposes of paying in capital stock of a particular legal entity does not depend on the demonstration of the predominant activity it performs. It means, in other words, that the disclaimer provided for in the final part of art. 156, § 2, I, of the Federal Constitution – which lists exception for tax exemptions the purchasing legal entity’s main activity is real estate transactions – does not apply to operations that seek to pay in capital stock.
In the exact words of the opinion, “the disclaimer provided for in the second part of item I, of § 2, of art. 156 of CF/88 apply only to the hypothesis of incorporation of assets resulting from a merger, takeover, spin-off or liquidation of a legal entity” and “do not allude to the exemption provided for in the first part of the provision” (paying-in of share capital).
Finally, the thesis of unconditional exemption, which is being applied by a few Courts in the country (Interlocutory Appeal No. 2042850-06.2021.8.26.0000, São Paulo Court, 14th Chamber of Public Law, Rapporteur Justice Kleber Leyser de Aquino, Publication Date: 04.23.2021).
In this scenario, in the event of the acquisition of real estate by paying in capital stock, real estate companies that have paid ITBI – or any other companies whose exemption has been denied by the municipal tax authorities for issues related to their main activity – may file a lawsuit to: i) recover the amounts related to the last 5 years (at least partially, in what corresponds to the amount of the paid-in capital stock) and/or ii) from now on, request that the immunity be granted automatically, preventing future assessments by the Municipalities.