Complementary Law No. 227/2026 as a Normative Milestone of the ITCMD

Complementary Law No. 227/2026 establishes, in a systematic and uniform manner, the general rules governing the Inheritance and Gift Tax (ITCMD), pursuant to Article 146, III, of the Brazilian Federal Constitution. It confers greater normative density upon a tax historically marked by legislative fragmentation, legal uncertainty, and a high degree of litigation. The new statute regulates with precision the taxable event, taxing jurisdiction, tax base, tax rates, and enforcement mechanisms, reshaping the ITCMD as a tax that is technically more structured and institutionally more controlled.

With respect to the taxable event, the Complementary Law reaffirms the incidence of ITCMD on transfers causa mortis and on gifts of any assets or rights with economic value, clarifying that its occurrence is independent of the opening of probate or estate proceedings, whether judicial or extrajudicial. The statute adopts a substantive concept of gift, encompassing excesses in marital or inheritance shares, remissions of obligations between related parties, simulated transfers, and other disguised gratuitous transactions, thereby reinforcing the primacy of economic substance over legal form.

Subsequently, and in a particularly relevant manner, Complementary Law No. 227/2026 expressly addresses situations involving assets, rights, donors, or deceased persons domiciled abroad, introducing, for the first time at a national level, general rules defining the taxing jurisdiction of the States and the Federal District in such circumstances. Until then, the absence of the complementary law required by Article 155, §1º, III, of the Federal Constitution formally precluded the levy of ITCMD in cross-border scenarios, leading to the repeated declaration of unconstitutionality of state statutes that sought to regulate such matters in advance. With the enactment of the new statute, an express and binding legal criterion now exists: taxing jurisdiction is determined according to the nature of the asset, distinguishing real estate from movable assets, securities, credits, and intangible rights, combined with connecting factors based on the domicile of the transferor or the transferee, or, where applicable, the territorial location of the asset. The practical effect is a structural shift, as the controversy ceases to be constitutional and formal and becomes material and operational, replacing an environment of uncertainty with a uniform, fully enforceable legal framework less susceptible to jurisdictional disputes.

The tax base assumes a central role in the new design of the ITCMD. As a general rule, the Complementary Law provides that the tax shall be levied on the market value of the asset or right transferred, reinforcing an economically oriented approach to taxation and moving away from purely formal or nominal criteria. This aspect is particularly sensitive in the regulation of quotas or shares in closely held companies, a key issue in wealth planning and in the structuring of family holding companies. In such cases, the law requires the adoption of a technically sound valuation methodology that reflects, at a minimum, the net equity adjusted by the fair market valuation of assets and liabilities, plus the economic value of goodwill, expressly allowing for methods that take into account the company’s future cash flow generation. The statute thus precludes undervaluation practices based solely on historical book values and raises the level of sophistication required in patrimonial and succession reorganizations.

With regard to tax rates, the Complementary Law expressly mandates the criterion of progressivity, subject to the maximum rate established by the Federal Senate. Although the determination of specific rates remains within the legislative competence of the States and the Federal District, Complementary Law No. 227/2026 has immediate effect as a general rule, binding subnational entities. Accordingly, States and the Federal District must adapt their respective legislation to comply with the progressive regime and the substantive parameters set forth in the Complementary Law, particularly with respect to tax brackets, calculation techniques, and consistency with the economic basis of the transfer.

Finally, the Complementary Law establishes an enhanced framework for inter-institutional tax enforcement cooperation, providing for information sharing among state tax authorities, the Brazilian Federal Revenue Service, notaries, commercial registries, and regulatory bodies. This model reduces informational asymmetries and strengthens the State’s ability to oversee the tax, with direct implications for more complex patrimonial structures.

In summary, Complementary Law No. 227/2026 prioritizes clarity, standardization, and legal certainty, at the cost of reduced interpretative discretion for taxpayers, reshaping the ITCMD as a tax that is technically more robust and institutionally more controlled.