With respect to the Tax on Causa Mortis Transmission and as Donation of any Property and Rights (Imposto sobre Doação de Quaisquer Bens e Direitos – ITCMD) in the case of donation accomplished by a donator resident abroad, the Court of Appeals in São Paulo (TJ-SP) confirmed the opinion that charging such tax is illegal.

According to the decision that was handed down, the reason of the impossibility to charge the ITCMD in these cases is that there is no federal complementary law admitting such event.

Specifically with respect to this case, it is important to mention that in judgment held in early December of 2012, the 6th Chamber of Public Law declared the unconstitutionality of the law of the State of São Paulo that established the applicability of the tax.

This is so because item III, paragraph 1, article 155, of the Federal Constitution expressly determines that it is possible to establish the tax when the donator has domicile or residence abroad or if the probate proceeding takes place abroad.

However, according to the Brazilian Constitution, not only the receiver must be resident in Brazil, but a national complementary law must be issued, approved by the Congress, to govern the matter. Specifically with respect to this requirement, it must be explained that such regulation does not exist.

Accordingly, while the matter is pending a national complementary law to govern the matter, assessing the tax is illegitimate, illegal and unconstitutional.

(Civil Appeal n. 0042510-832011.8.26.0053).