05/11/2024
In a unanimous decision on October 22, 2024, the First Panel of the Supreme Federal Court (STF) upheld a ruling that exempts the collection of Income Tax (IR) on donations made as advance inheritance. This decision rejected the Internal Appeal by the Attorney General’s Office of the National Treasury (Ag. Reg. No RE No. 1.439.539), supporting the solo decision by Minister Roberto Barroso.
The case that led to this ruling originated from a writ of mandamus filed by a taxpayer seeking to avoid the collection of Income Tax on the capital gains of assets transferred as donations at market value, given as an advance on inheritance to his children. The taxpayer argued that such taxation would result in illegitimate double taxation.
In its decision, Minister Flávio Dino emphasized that STF jurisprudence consistently finds that only actual increases in wealth are subject to IR. In this scenario, the donor’s assets did not increase but instead decreased, rendering the IR tax inappropriate.
This ruling is consistent with previous decisions by the STF’s First Panel, including a similar verdict last year in Internal Appeal in Extraordinary Appeal No. 1.387.761.
Our tax team is available to provide further information and guidance on this matter.
Authored by: Phillipe da Cruz Silva
