BRAZIL Law and Practice Contributed by: Alberto Malta, Davi Ory, Ana Vogado and Maria Eduarda Amaral, Malta Advogados
7.7 Requirements Before Use or Inhabitation
up to 8%, which are now progressive following the 2025 Tax Reform. Additionally, transfers of useful domain over federal property require pay - ment of laudemium, which is set at 5% of the property’s value. 8.2 Mitigation of Tax Liability Real estate transactions in Brazil frequently involve corporate structures to optimise taxa - tion, particularly to reduce ITBI incidence. A common practice is the purchase of shares in SPEs that hold real estate instead of direct prop - erty acquisition, which is an approach upheld by the Administrative Tax Appeals Council (CARF) and the STF, as long as there is no misuse of purpose. Another strategy is contributing real estate to equity holding companies, relying on the con - stitutional ITBI immunity. STF Theme 796 con - firmed this immunity but limited it to the value effectively paid into the share capital. Non-remunerated exchanges are also used to defer taxes and CARF has ruled that IRPJ and CSLL do not apply to these transactions under the presumed profit regime. Structures involving FIIs, FIPs and SCPs are often adopted for tax efficiency. However, contributions of property into FIIs are subject to ITBI, as affirmed by STJ precedents. 8.3 Municipal Taxes Brazilian legislation does not impose a specific tax on the occupation of commercial real estate. However, the use of urban properties generally entails tax burdens, particularly the IPTU, which is levied on ownership, possession or useful domain. Although the tax is formally owed by the owner, it is typically passed on to tenants in lease agreements.
The use of buildings for their intended purpose requires the issuance of the “Habite-se” , which is a certificate granted by the municipal authority confirming that construction complies with the approved project and urban planning laws. With - out it, occupation is considered irregular, subject to administrative sanctions and prevents regis - tration with the Real Estate Registry Office, mak - ing it impossible to individualise and sell units. A partial “Habite-se” may be granted for phased occupation, as long as each stage is completed and fully compliant. Additional documents may be required depend - ing on the project, such as the fire department inspection certificate (AVCB) and environmental licences, in line with Statute No 6,938/1981. There is no VAT on real estate purchases and sales in Brazil. The main tax on acquisitions is the ITBI, which is a municipal tax with a rate ranging from 2% to 4% and is calculated on the transaction value or the value determined by the tax authority, whichever is higher. Immunity applies when real estate is contributed to the share capital of companies whose core activity is not real estate. For sellers, real estate sales may generate capital gains, taxed federally at progressive rates from 15% to 22.5%, depending on the gain. Legal entities under the real, presumed or arbitrated profit regimes are subject to specific tax rules. In free transfers (donation or inheritance), the state estate tax (ITCMD) applies, with rates of 8. Tax 8.1 VAT and Sales Tax
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