Brazil's Supreme Court debates ITBI immunity for real estate holdings

The Brazilian Supreme Federal Court (STF) is deliberating on a significant tax controversy regarding ITBI (Property Transfer Tax) immunity for real estate holdings. Under Extraordinary Appeal 1.495.108 (Theme 1.348), the court is examining whether constitutional immunity for transferring property to increase social capital applies to companies whose primary activities involve the purchase, sale, rental, or leasing of real estate.

The case, involving Alpha P Regitano e Perrone Administração de Bens Próprios Ltda. and the Municipality of Piracicaba, could impact the costs of corporate reorganizations, the formation of patrimonial structures, and municipal tax revenue predictability. Justice Edson Fachin is the rapporteur. During virtual voting, Justice Gilmar Mendes proposed denying the immunity if the acquiring company has predominant real estate activity, a view supported by Justice Cármen Lúcia. The case has been moved to a physical plenary session for further analysis.