The Office of the Attorney General of the National Treasury (PGFN) regulates the giving of real estate in payment (dação em pagamento) for the extinction of debts enrolled in the active debt of the Federal Government. By means of PGFN Ordinance No. 32, of February 8, 2018, the PGFN established that the procedure includes debts whether or not in judicial collection, of a tax nature, with the exception of debts assessed under the Special Unified Regime for the Collection of Taxes and Contributions owed by Microenterprises and Small Businesses (Simples Nacional, Brazil’s simplified tax regime).
The giving of real estate in payment is an agreement between creditor and debtor, whereby one agrees to receive from the other a performance different from that which is owed to it, for the purpose of extinguishing the debt.
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The government explains that the asset offered must be owned by the debtor, in addition to being free of any encumbrances and covering the entirety of the debt that is intended to be settled. That is, the value of the debt plus interest, fines, and legal charges, without any kind of discount.
The appraisal, the PGFN emphasizes, must be carried out by an official financial institution, in the case of urban real estate, or by the National Institute for Colonization and Agrarian Reform (Incra), in the case of rural real estate. The costs of the appraisal must be borne by the debtor.
If there is a difference between the value of the offered real estate and the debt, the debtor may pay the remaining amount in cash. Should the offered asset be appraised at a value higher than the consolidated debt enrolled in the Active Debt of the Federal Government (DAU) that is to be extinguished, it will only be accepted if the taxpayer waives reimbursement of the difference by means of a public deed.
For the extinction of debts under judicial dispute by means of giving real estate in payment, the debtor and the co-responsible party, if any, must waive (desist from) the lawsuits in which the aforementioned debts are involved and renounce any legal claims on which the lawsuits are based. The waiver, however, does not release the debtor from the responsibility to pay court costs and procedural expenses, including attorneys’ fees.
How to proceed – Payment by means of this procedure shall take place through the opening of an administrative proceeding, which must be requested at a PGFN unit of the debtor’s tax domicile, with the following documents:
A petition formalized using the appropriate template, setting out the debts to be the subject of the giving in payment, in the form of the Sole Annex; signed by the debtor or legal representative with powers to perform the act; and
a) the document of incorporation of the legal entity or equivalent, with the respective amendments allowing identification of those responsible for its management, or the identification document of the individual, or the document of the legally qualified attorney-in-fact, as the case may be;
b) a certificate, issued less than 30 (thirty) days ago, from the competent Real Estate Registry Office, demonstrating that the debtor is the legitimate owner and attesting that the property is free and clear of any encumbrances;
c) a certificate of payment of the Urban Property Tax (IPTU) or the Rural Land Tax (ITR), the Public Cleaning Fee (TLP), electricity, water and sewage, condominium expenses, and other charges on the property;
d) civil, criminal, and labor certificates, federal and state, of the debtor’s domicile, as well as of the location of the property;
e) an appraisal report prepared by an official financial institution or by Incra, in the case of rural real estate, issued less than 360 (three hundred and sixty) days ago;
f) a statement of interest in the real estate, issued by the highest-ranking official of a public body that is part of the direct Federal Administration, of any of the branches of the Federal Government, accompanied by a declaration of budgetary and financial availability of the amount relating to the real estate offered in payment, in compliance with the provisions of Art. 4, §3, of Law No. 13,259, of 2016;
g) in the case of interest in the real estate by an entity that is part of the indirect Federal Administration, a statement of interest in the real estate, issued by its highest-ranking official, accompanied by a declaration of budgetary and financial availability of the amount relating to the real estate offered in payment, in compliance with the provisions of Art. 4, §3, of Law No. 13,259, of 2016, as well as a prior statement from the Secretariat of Federal Heritage (SPU) on the possibility of incorporating the property into the assets of the Federal Government and the subsequent transfer to the entity that is part of the indirect Federal Administration.
Giving in payment – approval
After formalization of the petition with the documents mentioned above, the decentralized PGFN unit will confirm whether the giving in payment of real estate is appropriate and, if so, will forward the administrative proceeding for review by the General Coordination of Credit Recovery Strategies (CGR) of the PGFN.
The CGR, in turn, will forward the proceeding to the Secretariat of Federal Heritage (SPU) to verify the possibility of incorporating the property into public assets. Afterwards, the coordination will decide whether to accept the asset for the extinction of the debts and, if accepted, will return the proceeding to the decentralized unit that initiated the document in order to finalize the procedure.
The debtor will be notified of the decision to accept the proposal and will be summoned to, if applicable to the situation, pay the difference between the value of the asset and the value of the debt, or to present a waiver of reimbursement of amounts should the value of the offered asset exceed the amount of the debt. Once this is done, the PGFN unit will forward the proceeding to the SPU to incorporate the property into the assets of the Federal Government and to take the appropriate administrative measures.
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