Inheritance and Estate Tax in Brazil

What is ITCMD and who pays it?

Brazil has no federal estate or inheritance tax. The relevant levy is the Imposto sobre Transmissao Causa Mortis e Doacao (ITCMD), a state tax authorised by Article 155, I of the Federal Constitution of 1988. It applies to two distinct taxable events: causa mortis transfers (assets passing at death through intestacy or will) and inter-vivos donations (gratuitous lifetime gifts of property or rights). The obligation falls on the beneficiary -- the heir, legatee, or donee -- not on the decedent's estate, distinguishing the Brazilian model from the US federal estate-tax structure where the estate itself is the taxpayer. Donors may be jointly liable in some states if the donee fails to pay. The calculation base is the market value of the asset at the date of the taxable event, a standard codified at the national level by Complementary Law 227/2026 (LC 227/2026), effective 14 January 2026.[1]

What rate applies and how does the 8% Senate cap work?

Federal Senate Resolution No. 9/1992 sets the maximum ITCMD rate at 8% and delegates rate-setting, exemption thresholds, and collection procedures entirely to each state and the Federal District. No state may exceed 8%; within that ceiling, states choose whether to apply flat or progressive schedules. As of mid-2026 the spread across the 27 jurisdictions runs from 2% (Amazonas, flat) to 8% (the ceiling applied in the upper band of progressive states). The table below shows rates across major states before the mandatory progressivity transition triggered by EC 132/2023.[2][3]

States not shown typically fall in the 2-5% range; consult the relevant Secretaria de Fazenda for current brackets.[3]

What did EC 132/2023 change -- and what is still transitioning?

Constitutional Amendment No. 132, promulgated 20 December 2023, was Brazil's broadest fiscal reform in a generation. For ITCMD it made two structural changes that are enacted (in the Constitution now) but whose full effect depends on state legislative implementation still in progress as of June 2026.[4]

1. Progressive rates are now mandatory nationwide. Before EC 132/2023, states could apply flat rates below the 8% ceiling indefinitely. The amendment expressly requires that ITCMD "shall be progressive based on the value of the inheritance, bequest, or donation." States using flat rates -- including Sao Paulo (4%) and Minas Gerais (4%) -- must pass new local legislation converting to progressive brackets before rates can change. Due to the constitutional anterioridade (annuality) and 90-day advance-notice rules, new progressive schedules enacted in 2026 take effect no earlier than 1 January 2027.[4][5]

2. Foreign-asset situs rules clarified. Before EC 132/2023, the Supreme Court (STF) held in RE 851.108/DF (2021, Theme 825) that states could not collect ITCMD on foreign-source inheritances or donations without a specific federal complementary law. EC 132/2023 closed that gap in the Constitution, and LC 227/2026 operationalised it: Brazilian residents who receive assets, rights, or equity structures located abroad now owe ITCMD to the state where they are domiciled. For causa-mortis events involving a non-resident decedent, ITCMD is owed where the heir or legatee is domiciled.[1][4] Individual states must still update their own laws before collection actually begins -- so in 2026 this rule is constitutionally and federally enacted but partially in transition at state level.

How does LC 227/2026 shape the national framework?

Complementary Law 227, signed 14 January 2026, is the federal statute that implements EC 132/2023's ITCMD provisions. Its key rules, binding on all 27 jurisdictions:[1]

• Market-value base. All assets valued at market value on the date of the taxable event, replacing inconsistent state practices using IPTU-assessed values or book values.
• Cumulative donation rule. Repeated gifts between the same donor and donee within a state-specified period are aggregated; progressive rates apply to the running total, with a credit for ITCMD already paid.
• Trust and offshore structures. Trusts trigger ITCMD on actual transfer to beneficiaries (or at the settlor's death, whichever is earlier). Merely creating a trust is not a taxable event.
• VGBL/PGBL exemption preserved. Private pension and insurance-wrapper products remain outside ITCMD, consistent with STF precedent.
• Usufruct termination not taxed. When a reserved usufruct extinguishes naturally, transferring full ownership to the bare owner, no fresh ITCMD arises.

A separate Senate proposal (Senate Resolution Bill No. 57/2019) would raise the ceiling from 8% to 16% for high-value estates. As of June 2026 that proposal has not been enacted; the 8% ceiling remains in force.

What exemptions and reliefs apply?

Exemptions are set by each state. Common patterns as of 2026:[2][3]

• Sao Paulo: estates below approximately R$82,000 (2,500 UFESPs at the 2026 UFESP value) are exempt; individual donations below the same threshold per donee per year are also exempt.
• Surviving spouses and registered partners: many states provide reduced rates or full exemptions on the family home passing to a surviving spouse or stable-union partner.
• Small rural properties: several states exempt family-farm transfers meeting size and income criteria.
• Private pension and insurance benefits (VGBL/PGBL): exempt nationwide under LC 227/2026 and confirmed by STF.
• Persons with disabilities: most states waive ITCMD for heirs or donees with certified disabilities.

Exemption thresholds are often expressed in state-specific units of account (UFESPs in Sao Paulo, UFEMGs in Minas Gerais) that are updated annually, so monetary equivalents shift each year. Verify current figures with the relevant Secretaria da Fazenda.

Brazil has no federal estate tax, no unified national probate levy, and no inheritance tax treaties with any country, including the United States. For cross-border situations involving Brazilian assets, engaging a qualified tax professional familiar with both Brazilian state law and any applicable foreign-jurisdiction rules is essential. Find vetted practitioners on the Brazil country overview directory.