ITBI Does Not Apply to the Assignment of Real Estate Property Rights

A majority has formed among the justices of the Federal Supreme Court (STF) to reaffirm the Court’s case law that the ITBI does not apply to the assignment of property rights.

According to the President of the Court, Justice Luiz Fux, the growing demand related to the subject led to the need to reaffirm the STF’s position and to avoid legal uncertainty.

This matter is recorded in ARE 1294969. It was analyzed under theme 1124 as general repercussion. In the same ruling, the justices also voted on the thesis to be reaffirmed.

Thus, in this specific case, in addition to recognizing the general repercussion of the matter, the justices accepted the reporting justice’s proposal to rule on the merits, reaffirming the Supreme Court’s case law. Fux proposed the thesis that “the triggering event of the Tax on the Inter Vivos Transfer of Real Property (ITBI) only occurs upon the effective transfer of real estate ownership. This takes place through registration.”

ITBI on the assignment of property rights

According to the case records, the municipality of São Paulo defended the validity of charging the ITBI on the assignment of the rights arising from the purchase and sale commitment. In the municipality’s analysis, the need for notarial registration is irrelevant.

In his vote, Fux states that “the STF’s case law considers it illegitimate to require the ITBI prior to the registration of the title transferring ownership of the asset. Therefore, a levy based on a purchase and sale promise proves to be improper.” In the justice’s view, the tax obligation arises with the transfer of ownership.

So far, seven justices have followed the reporting justice as to general repercussion: Marco Aurélio, Roberto Barroso, Edson Fachin, Dias Toffoli, Ricardo Lewandowski, Rosa Weber and Alexandre de Moraes.

The others have not yet expressed their views. With respect to the reaffirmation of the case law, among those who have already voted, only Justice Marco Aurélio voted contrary to Justice Fux. The voting remains open in a virtual session until February 11 (today).

Source: Flávia Maia – jota – 2/10/21

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