6/30/2020
Due to the Coronavirus pandemic (“Covid-19”), the Brazilian Federal Government recently sanctioned Act No 14.010/20, establishing an Emergency Legal Regime (“ELR”), which addresses private law relations between individuals.
ELR does not change any provision of the Brazilian Civil Code (“CC”), but it only suspends certain rules that turned out to be incompatible with the current economic and social crisis caused by Covid-19.
Concerning the changes related to Inheritance and Succession Law, ELR granted an extension period for the filing of a probate proceeding (Article 16).
According to Article 661 of the Civil Procedure Code (“CPC”), any probate must be filed within 2 (two) months of the date of death. However, ELR, in anticipation of a likely difficulty for such a deadline to be met, provided that, for deaths that took place as from February 1st, 2020, the initial term of 2 (two) months shall be postponed to October 30, 2020.
Besides, if the probate proceeding has initiated before February 1st, 2020, the 12-month time limit to conclude a probate shall be suspended until October 30, 2020.
Despite the above flexible rules, ELR does not mention whether the extension of the legal terms will bind the collection of penalties provided for in state tax legislation in cases where the estate tax is paid after the due date.
For example, the Gift and Estate Tax Law of the State of São Paulo (Act No 10.705/00) determines that if the probate is not filed within 60 days from the date of death, the tax shall be added by a 10% of penalty; if the delay exceeds 180 days, the penalty will double to 20%.
Even if there is no express provision in ELR (mainly because the estate tax collection is jurisdiction of each of the Brazilian States and not of the Federal Government), it is clear that if the terms for filing and closing probate proceedings are suspended, the penalties provided by Act No 10.705/00 should also be suspended.
However, the collection of the penalties is automatically made by the Department of Taxation and Finance of the State of São Paulo, whenever the terms provided for in Act No 10.705/00 fail to be observed.
Given the above contradictory rules, the legal terms provided for in the state tax legislation shall be aligned to ELR rules, so that the penalty and any default interest shall reach only those that fail to comply with the new terms provided for in Article 16 of ELR.
Coauthors: Marcelo Trussardi Paolini and Maria Paula Meirelles
