Brazil Supreme Court bans property area as IPTU tax basis

The Brazilian Supreme Federal Court (STF) has ruled unanimously that municipalities are prohibited from setting IPTU (Urban Property and Territorial Tax) rates based solely on the area of a property. The decision, reached during the judgment of Extraordinary Appeal (ARE) 1593784, reaffirms that tax progressivity must be determined by the property's value, location, or use, rather than its physical size.

The case originated from a law in Chapecó, Santa Catarina, which applied a higher tax rate for properties with a built area exceeding 400 square meters. Justice Dias Toffoli, the rapporteur, noted that while the Constitution allows for different rates based on use and location, property area is not a valid criterion for tax progressivity under current constitutional amendments.