TJRs removes ITBI incidence in corporate operation

in a recent decision, the Rio Grande do Sul Court has shown a favorable understanding to entrepreneurs who decide to constitute holdings for Planning and reorganization of equity, dismissing the incidence of the tax on the transmission of real estate in a corporate operation of integralization of property in the corporate capital of a company.

jurisprudence regarding this subject is still quite controversial, although, within the Federal Supreme Court, there is already subject 796, which deals specifically on art. 156, § 2, item I, of the Federal Constitution, which establishes it does not apply to ITBI “on the transmission of assets or rights incorporated into the equity of a legal entity in the realization of capital, nor on the transmission of goods or rights arising from merger, incorporation, split or extinction of a legal entity, except if, in such cases, the preponderant activity of the acquirer is the purchase and sale of these property or rights, rental of real estate or lease ”.

In the case analyzed, the company has increased its share capital through the integralization of some properties, requiring to the City Hall the tax immunity of ITBI, based on the constitutional provision referred to. The City Hall, however, denied the company's request, understanding that its preponderant activity would be the rental of real estate, in which case the tax on the transfer of real estate would be levied to the capital. This was also the understanding of the lower court.

However, the court understood differently, explaining that the immunity conferred by the Federal Constitution would include (i) in the transmission of goods to the corporate capital of company; and (ii) the occurrence of operations such as incorporation, merger, split or extinction. In the understanding of the State Court, in the specific case of item “(II)” the immunity could not be conferred if the preponderant activity of the company were the sale, rent or lease of real estate. Thus, as in the case in reference the company was transmitting goods to the share capital (hypothesis of item “(i)”), it could be conferred the immunity of ITBI.

As mentioned, the jurisprudence in relation to this issue is still very dissonant, and it is certain that the decision of the TJRs does not represent the understanding of the majority of other Brazilian courts, nor of municipal agencies, which usually require that companies demonstrate what their preponderant activity is to grant ITBI immunity in referred corporate operations. Still, such a decision represents an important achievement for taxpayers, especially at an economic moment where companies seek efficiency and fiscal optimization.