{"id":5073,"date":"2026-11-05T10:51:51","date_gmt":"2026-11-05T13:51:51","guid":{"rendered":"https:\/\/www.cpdma.com.br\/itbi-immunity-for-capital-contributions-following-the-brazilian-supreme-federal-courts-ruling-in-theme-1-348\/"},"modified":"2026-11-05T11:57:57","modified_gmt":"2026-11-05T14:57:57","slug":"itbi-immunity-for-capital-contributions-following-the-brazilian-supreme-federal-courts-ruling-in-theme-1-348","status":"publish","type":"post","link":"https:\/\/www.cpdma.com.br\/en\/itbi-immunity-for-capital-contributions-following-the-brazilian-supreme-federal-courts-ruling-in-theme-1-348\/","title":{"rendered":"ITBI Immunity for Capital Contributions Following the Brazilian Supreme Federal Court\u2019s Ruling in Theme 1.348"},"content":{"rendered":"\n
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In a virtual session that concluded on October 19, 2026, the Brazilian Supreme Federal Court completed its consideration of Theme 1.348<\/a> under the general repercussion framework in Extraordinary Appeal No. 1.495.108\/SP, with Justice Edson Fachin serving as reporting justice. The Court held that the ITBI tax immunity provided for in art. 156, \u00a7 2\u00ba, I, da Constitui\u00e7\u00e3o applies unconditionally to contributions of assets and funds to pay in share capital, regardless of whether the company\u2019s principal activity is real estate, except in cases involving sham transactions or circumvention of the law aimed at improperly obtaining the benefit of the immunity.<\/h5>\n\n

The Constitution precludes the imposition of ITBI on transfers of assets to a legal entity as capital contributions, except where the transferee\u2019s predominant activity is the purchase and sale of real estate, the leasing of real property, or commercial leasing. Under art. 37, \u00a7 1\u00ba, do C\u00f3digo Tribut\u00e1rio Nacional, an activity is deemed predominant if it accounts for more than fifty percent of the company\u2019s operating revenue during the statutory period. The question was whether this exception also applied to capital contributions or only to corporate reorganizations. The issue in Theme 1.348 was whether the immunity also extended to companies predominantly engaged in real estate activities.<\/p>\n\n

The Unconditional Immunity Recognized in Theme 1.348<\/strong><\/strong><\/p>\n\n

The outcome of the case turned largely on the literal and grammatical interpretation of the constitutional text. The central issue was the phrase \u201cin those cases\u201d[1]<\/a><\/sup>, which appears at the end of inciso I do \u00a7 2\u00ba do art. 156 da Constitui\u00e7\u00e3o Federal, and the determination of which circumstances it referred to. The majority held that the exception based on the transferee\u2019s predominant activity applies only to the second part of the provision, which governs transfers of assets resulting from a merger, absorption, spin-off, or dissolution of a legal entity, and does not extend to the first part, which governs contributions of assets to share capital. On that basis, the majority concluded that immunity for capital contributions is unconditional, regardless of whether real estate is the company\u2019s predominant activity. Justices Gilmar Mendes and Fl\u00e1vio Dino dissented.<\/p>\n\n

The Continuing Limits Under the Brazilian Supreme Federal Court\u2019s Theme 796<\/strong><\/strong><\/p>\n\n

Although the ruling represents a significant step forward, it leaves unresolved the dispute that has caused taxpayers the greatest concern, which stems from the misinterpretation by many municipalities of Theme 796 under the general repercussion framework.[2]<\/a><\/sup> In recognizing the unconditional immunity, the Supreme Federal Court retained the limit established in that precedent, under which the immunity applies only up to the amount of share capital to be paid in. Relying on that limit, municipal tax authorities continue to impose the tax on the difference between the declared book value and the value at which they assess the property, even when the entire property is contributed to share capital and no capital reserve is created. Some courts have ruled in favor of taxpayers on this issue, but when those rulings reach the Superior Court of Justice, the outcome tends to vary depending on which party appeals. Determining market value is an evidentiary matter, and S\u00famula 7 and related precedential statements bar the court from reexamining factual findings, leaving the lower court\u2019s ruling undisturbed.<\/p>\n\n

Even so, the ruling provides a tangible benefit to companies engaged in real estate activities. Although municipalities continue to impose the tax on the difference, a charge that remains open to challenge, taxpayers are now assured of immunity at least up to the book value of the assets contributed to share capital.<\/p>\n\n

Consider a property declared at R$100,000.00 and assessed by the municipality at R$500,000.00. Previously, the company\u2019s real estate activities were grounds for denying immunity altogether and imposing the tax on the full R$500,000.00. Now that immunity is recognized up to the amount contributed to share capital, the tax applies, at most, to the R$400,000.00 difference. The closer the value declared by the individual making the contribution is to the municipal assessment, the greater the benefit, as the taxable difference narrows and the likelihood that no tax will be due increases. It should be noted that choosing between historical book cost and market value for the contribution, as permitted by art. 23 da Lei n\u00ba 9.249\/95, also affects the individual\u2019s income tax liability and capital gains, which warrants assessing each transaction on a case-by-case basis.<\/p>\n\n

The Right to a Tax Refund and the Risk of Limits on the Ruling\u2019s Retroactive Effect<\/strong><\/strong><\/p>\n\n

The ruling also opens the door to recovering amounts already paid. Taxpayers who improperly paid ITBI on the portion now recognized as immune may, in principle, seek a refund either through an administrative claim or by filing an action to recover tax unduly paid, subject to the five-year limitations period running from the date of each payment under art. 168, I, do C\u00f3digo Tribut\u00e1rio Nacional. Under S\u00famula 625 do STJ, filing an administrative claim does not interrupt the limitations period for bringing a refund action. Taxpayers who choose the administrative route should therefore keep track of the deadline in case they need to file suit. The Court did not limit the temporal effects of its holding when it announced the judgment, so the holding currently extends to prior payments. Municipalities may, however, seek such a limitation by filing motions for clarification after publication of the judgment, in which case the right to a refund could be limited to taxpayers who already had a judicial proceeding pending. Taxpayers seeking recovery should therefore promptly consider filing suit to improve their chances of qualifying for any exception the Court may establish (the Supreme Federal Court sometimes uses the date of its ruling on the merits as the cutoff).<\/p>\n\n

Cesar Peres Dulac M\u00fcller Advogados is available to assess how the ruling applies to individual cases, advise on future capital contributions, and evaluate whether taxes already paid may be recovered.<\/p>\n\n

<\/a><\/p>\n\n

\n\n

[1] Text of art. 156, \u00a7 2\u00ba, I, da Constitui\u00e7\u00e3o Federal: \u201c\u00a7 2\u00ba The tax provided for in item II: I \u2014 does not apply to the transfer of assets or rights contributed to a legal entity as payment for share capital or to the transfer of assets or rights resulting from a merger, absorption, spin-off, or dissolution of a legal entity, unless, in those cases, the transferee\u2019s predominant activity is the purchase and sale of those assets or rights, the leasing of real property, or commercial leasing.\u201d<\/sup><\/a><\/p>\n\n

[2]<\/sup><\/a> In Theme 796 (RE 796.376\/SC, Justice Alexandre de Moraes writing for the Court, decided in 2020), the Supreme Federal Court held that \u201cthe ITBI immunity provided for in inciso I do \u00a7 2\u00ba do art. 156 da Constitui\u00e7\u00e3o Federal does not extend to the portion of the value of the assets that exceeds the amount of share capital to be paid in.\u201d The case involved a property whose value exceeded the subscribed share capital. The excess was credited to a capital reserve account, and the Court held that it could be taxed. Several municipalities, however, have since invoked the precedent to tax the mere difference between the value declared by the taxpayer and the assessed market value, even when the property\u2019s full value is credited to share capital and no capital reserve is created. Those facts differ from those of the case the Court decided.<\/p>\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

In a virtual session that concluded on October 19, 2026, the Brazilian Supreme Federal Court completed its consideration of Theme 1.348 under the general repercussion framework in Extraordinary Appeal No. 1.495.108\/SP, with Justice Edson Fachin serving as reporting justice. The Court held that the ITBI tax immunity provided for in art. 156, \u00a7 2\u00ba, I, […]<\/p>\n","protected":false},"author":1,"featured_media":5074,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[32],"tags":[],"class_list":["post-5073","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"ase":null,"_links":{"self":[{"href":"https:\/\/www.cpdma.com.br\/en\/wp-json\/wp\/v2\/posts\/5073","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cpdma.com.br\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cpdma.com.br\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cpdma.com.br\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cpdma.com.br\/en\/wp-json\/wp\/v2\/comments?post=5073"}],"version-history":[{"count":1,"href":"https:\/\/www.cpdma.com.br\/en\/wp-json\/wp\/v2\/posts\/5073\/revisions"}],"predecessor-version":[{"id":5075,"href":"https:\/\/www.cpdma.com.br\/en\/wp-json\/wp\/v2\/posts\/5073\/revisions\/5075"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cpdma.com.br\/en\/wp-json\/wp\/v2\/media\/5074"}],"wp:attachment":[{"href":"https:\/\/www.cpdma.com.br\/en\/wp-json\/wp\/v2\/media?parent=5073"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cpdma.com.br\/en\/wp-json\/wp\/v2\/categories?post=5073"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cpdma.com.br\/en\/wp-json\/wp\/v2\/tags?post=5073"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}