BRAZIL Law and Practice Contributed by: Daniel Zugman and Frederico Bastos, BVZ Advogados | Bastos, Bari, Vilela e Zugman
4. Family Business Planning 4.1 Asset Protection
To reduce family conflict, holding structures are typi - cally supported by shareholders’ agreements, family protocols and governance provisions dealing with vot - ing rights, dividend policy, transfer restrictions, family participation in management, remuneration and dis - pute resolution. Wills generally complement these arrangements by disposing of the disposable portion of the estate. They remain subject to Brazil’s forced heirship rules and do As a general rule, Brazilian inheritance and gift tax (ITCMD) legislation does not provide for an automatic discount to reflect lack of marketability, liquidity or control when a partial interest is transferred by gift or inheritance. The ITCMD tax base is generally the fair market val - ue of the transferred interest or, where market value cannot readily be determined, a value supported by accounting records, net equity or valuation evidence. In practice, tax authorities frequently rely on the pro - portional net asset value of the entity or the market value of its underlying assets, particularly in family holding companies. not eliminate the need for probate. 4.3 Transfer of Partial Interest Although valuation discounts may be supportable in specific circumstances, Brazilian law does not contain a settled statutory rule expressly recognising minor - ity or marketability discounts for ITCMD purposes. Accordingly, the adopted valuation should be sup - ported by appropriate technical evidence to withstand potential challenges by the tax authorities.
As Brazil has no domestic trust regime, asset protec - tion of assets located in Brazil is generally achieved through corporate vehicles, particularly family holding companies. Families commonly contribute real estate, investment assets and business interests to a holding company to centralise ownership, separate personal and business risks, and establish governance and succession rules. These structures are often combined with sharehold - ers’ agreements, retained usufruct and other suc - cession planning mechanisms. Their effectiveness is nevertheless subject to important legal limitations. Brazilian courts may pierce the corporate veil where a company is used to defraud creditors, abuse the cor - porate form, commingle assets or circumvent manda - tory succession rules. On the other hand, assets located abroad controlled by Brazilian tax-residents are commonly owned by means of private investment companies and trust structures. Accordingly, effective asset protection planning must be supported by genuine governance, business or succession objectives and cannot rely solely on credi - tor protection or tax-driven purposes. 4.2 Succession Planning Family business succession planning in Brazil gener - ally combines corporate, succession and governance tools to facilitate the gradual transfer of ownership and control while reducing tax costs and family disputes. The most common structure is a family holding com - pany, through which operating businesses, real estate and investment assets are centralised. Founders com - monly make lifetime gifts of shares or quotas to their heirs while retaining usufruct or voting rights, allowing them to preserve control and income during their life - time. Gifts may also be structured at historical cost, deferring capital gains tax while facilitating the gradual transfer of ownership.
5. Wealth Disputes 5.1 Trends Driving Disputes
Wealth disputes in Brazil are increasingly driven by the interaction between succession planning, tax reforms and the growing internationalisation of family wealth. The main areas of dispute include the following. • Inheritance and gift tax (ITCMD) – gifts and estates involving foreign assets or parties, particularly
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