07/8/2024
The São Paulo State Department of Finance and Planning (SEFAZ-SP) has launched a fiscal initiative to investigate potential simulations of company share purchases and sales used to disguise donations and evade the payment of the Inheritance and Donation Tax (ITCMD) owed to the State Treasury.
This audit initiative focuses on partners and shareholders of companies who have transferred or received social shares or stock in transactions deemed undervalued by the tax authorities. In such cases, the discrepancy between the transaction value and the amount considered appropriate by SEFAZ-SP may be treated as a donation. These operations often occur between related parties and typically involve succession planning with family holdings, which are primary targets of the audit.
Additionally, the audit covers gratuitous transfers of company shares. The aim here is to ensure that donations are taxed based on the company’s net worth, which is often substantially higher than the value of the transferred shares.
As a result of this initiative, thousands of taxpayers are being notified by the São Paulo tax authorities to seek “self-correction.” According to SEFAZ-SP, these notifications do not mark the start of a tax action but offer taxpayers a chance to correct their records. By opting for “self-correction,” taxpayers can avoid a tax assessment via a Notice of Infraction and Fine, which would include interest and a punitive fine equivalent to 100% of the tax amount.
Given this situation, it is crucial to be aware of the impact of succession planning on tax compliance to prevent disputes and fiscal penalties.
Our tax team is available to provide guidance and clarification on any notifications related to this issue.
Co-authored by: Tiago Zonta Guerreiro and Maria Eduarda Moreira Lima Novaes
