Setting up a family holding company has become a common strategy among Brazilian entrepreneurs, especially for asset management and succession planning. However, a frequent question is whether it is possible to exempt ITBI (Real Estate Transfer Tax) when creating a family holding company. This article explores this question, covering the legal aspects, advantages and disadvantages, as well as providing calculation examples and ITBI tables.
What is ITBI?
ITBI is a municipal tax levied on the transfer of ownership of real estate, whether by sale, donation or any other form of transfer. The ITBI rate varies from municipality to municipality, but is generally between 2% and 3% of the property's market value.
ITBI table in some Brazilian municipalities:
| Municipality | Rate (%) |
|---|---|
| São Paulo | 3% |
| Rio de Janeiro | 2% |
| Belo Horizonte | 3% |
| Curitiba | 2.7% |
| Porto Alegre | 3% |
What is a family holding company?
A family holding company is a company set up with the aim of managing a family's assets. This corporate structure can include real estate, shares, stakes in other companies and other assets. Holding companies are mainly used to plan the succession of assets and reduce the tax burden.
Read also: How to reduce taxes and manage assets with Family Holdings?
Exemption from ITBI when setting up a family holding company
The possibility of ITBI exemption on the transfer of real estate to a family holding company depends on a number of factors, as stipulated by the National Tax Code (CTN) and municipal legislation.
Article 156, II of the CTN
The CTN provides for the possibility of exemption from ITBI on the payment of share capital with real estate, provided that the company's main activity is not the purchase and sale, rental or leasing of real estate. In other words, if the holding company's main activity is not the sale of real estate, the exemption can be applied.
Example of ITBI calculation
Imagine that a family owns a property valued at R$ 1,000,000.00 in São Paulo, where the ITBI rate is 3%. Without the exemption, the ITBI calculation would be:
ITBI=R$1.000.000,00×0,03ITBI = R$ 1.000.000,00 times 0,03 ITBI=R$30.000,00ITBI = R$ 30.000,00
If the transfer is made to a family holding company that does not fall within the predominant activities described above, this ITBI amount may be exempt.
Advantages of setting up a family holding company
Succession planning
One of the biggest advantages of creating a family holding company is succession planning. With a holding company, it is possible to clearly define how the assets will be distributed among the heirs, avoiding disputes and ensuring a smooth transition.
Tax savings
In addition to the possible ITBI exemption, a family holding company can save on other taxes, such as income tax on capital gains and the Causa Mortis and Donation Transfer Tax (ITCMD).
Asset protection
A family holding company also offers asset protection, as it separates the partners' personal assets from the company's assets, making it difficult to seize assets in the event of personal debts.
Disadvantages of setting up a family holding company
Incorporation and maintenance costs
Setting up and maintaining a family holding company involves legal and accounting advice, as well as registration fees and taxes on the share capital.
Administrative complexity
Managing a family holding company can be complex, requiring strict control of financial and asset operations, as well as compliance with various legal obligations.
Tax risks
Although the legislation allows for ITBI exemption in some cases, the interpretation of the rules can vary between municipalities, which can lead to tax disputes and the need for legal defense.
CLM Controller: specialist in support for Family Holdings
- Advice on setting up a holding companyLegal and accounting advice for setting up a holding company, ensuring that all legal formalities are complied with.
- Tax planning: Identification of opportunities for tax exemption, including ITBI, and reduction of the tax burden.
- Asset ManagementSupport in the administration of the holding company's assets, with strict control of financial and property operations.
- Succession Consulting: Assistance in preparing a succession planning efficient, avoiding disputes between heirs and ensuring a smooth transition.
Conclusion
Setting up a family holding company can offer several advantages, including possible exemption from ITBI, efficient succession planning and tax savings. However, it is essential to consider the set-up and maintenance costs, the administrative complexity and the tax risks involved. Relying on the expertise of CLM Controller can make all the difference, providing security and efficiency in the management of family assets. It is recommended that entrepreneurs consult a specialist in accounting and tax law to assess the feasibility and specific benefits of creating a family holding company for their asset situation.
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