Legislators aiming to raise taxes on the wealthy
There are more than 30 bills in Congress that could change tax rules directly affecting the wealthiest families in Brazil. Although the pandemic has frozen some plans, estate planning and tax law experts believe the government's need to fiscally recover after extraordinary expenditures with covid-19 means it will not be long before attempts to boost receipts materialize.According to a survey prepared by Joanna Oliveira Rezende Barbosa, a partner with the financial planning team of Velloza Advogados, the list includes taxation of profits and dividends (5 bills), closed-end funds (4), compulsory loan (5), tax on large fortunes (15), in addition to the Tax on Transmission Cause Mortis and Donation (ITCMD), with five other proposals, two in the State Assembly of São Paulo. One of them creates a transfer tax for pension plans (VGBL) that would remove one of the main draws of this retirement strategy.
Along with the pandemic, what these discussions have already caused, in fact, is an acceleration of donations in life, with a reserve of usufructuary enjoyment - when there is an asset transfer to the heirs, but the original holder maintains the right to manage and benefit from it.
"The pandemic raised a warning that had been going on for many years, and now the need to plan has never been more real," Ms. Barbosa says. "Whether because the tax scenario for high-income and wealthy families can change significantly, whether because of fear of discontinuity of life or because of the understanding of how important it is to have everything thought out in times of difficulty."
There are proposals to federalize the ITCMD and, in the São Paulo State Assembly (Alesp), to increase the rate today set at 4% to progressively reach 8%, depending on the assets.
A bill by state deputies Paulo Florilo and José Américo (Workers' Party, PT) - released in April - proposes the tax on VGBL balance transfers, equating it to other investments. It would cause profound changes in the pension industry. Ms. Barbosa says there is already a decision at the Supreme Court of Justice (STJ) with the understanding that VGBL is insurance, and according to the Civil Code, it is not part of an estate.
Ana Cláudia Utumi, the founding partner of Utumi Advogados, says that in a country with so many difficulties encouraging long-term savings, it would be another element to weigh against since even the marketing strategy of companies in the sector uses the tax benefit as an argument to...
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