On the recognition of ITBI immunity

by integrating real estate into a company's capital, as in the case of holdings consisting of the end of heritage administration, The Federal Constitution establishes that there will be immunity of the Tax of Transmission of Real Estate (ITBI), unless the preponderant activity of the company is the lease of real estate; the purchase and sale of goods or rights; or lease. The activity will be considered preponderant if more than 50% of the company's operating revenue is due to such activity.

Although the hypothesis of immunity seems well defined in the legal sphere, taxpayers and the municipal tax authorities have been discussing a lot before the judiciary. This is because the tax authorities have rejected the administrative requests made by taxpayers in order to recognize ITBI immunity, since the absence of operational revenue would not be able to prove the preponderant activity of the company. As is well known, it is recurring that the company faces a period without operating revenue, or a period prior to the beginning of the operation, which is true in the case of the holdings, in which, even without operation and without revenue, the capital is the capital being integrated with real estate.

In this sense, there is no legal provision that removes the immunity of ITBI in cases of real estate incorporation into the corporate capital of legal entity that has no operational revenue, so that immunity claims could not be rejected by the tax authorities in the face of such foundation.

In this context, in the context of the judgment of a security warrant in the São Paulo Court of Justice, the judges of the 15th Chamber of Public Law recognized the particular company the right to ITBI immunity, once that the municipal tax authorities would not have shown that the taxpayer's preponderant activity would be due to real estate lease.

The absence of operating revenue is therefore not sufficient to certify the preponderance, or not, of real estate activity, and it is up to the municipal tax authorities to demonstrate the effective exercise of such activity by the company, otherwise prevailing the Legal understanding regarding ITBI immunity in operations aimed at realization of real estate in the corporate capital of companies, subject to legal specifications.