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The donation tax, which receives the acronym ITCMD, is one of the most common that currently exists when we talk about taxation.
However, many doubts arise and through this content we will simplify this entire process for you.
Let's go?
What is Donation Tax and how does it work?
Better known by its acronym ITCMD, the Causa Mortis and Donation Transmission Tax is a tax on inheritances and donations.
In this case, taxation can happen in two ways, both by the state and by the Federal District.
Therefore, the rates will vary from state to state. Therefore, if you live in São Paulo, your tax rate will differ from those who live in Minas Gerais.
The tax, in this case, happens whenever you receive a property as a result of the death of the owner.
Certainly, one of the biggest doubts is related to donating money or other types of goods, as there is a doubt as to whether or not there is a Donation Tax.
The answer is yes, even if it is a cash donation, tax must be paid.
Payment tends to happen at the notary's office, when you go to regularize it.
Who pays the Gift Tax?
Donation Tax is paid by whoever is receiving the good, regardless of what is being donated.
If one of the heirs decides to give up the amount, this renunciation will also have taxes.
For this, it will be made a donation and the other heirs, who will receive their share, will pay according to the value.
What is the value of the Donation Tax?
As we said before, each state determines its tax, with a maximum limit, determined by the Federal District.
Since 1992, the government has determined that up to 8% must be paid on the value of the property that was donated, varying from state to state.
It is important to pay attention here, because, while some states determine fixed values, some states have chosen to have a progressive rate.
The progressive rates within the donation process mean that the larger the item donated, the higher the fee that must be paid.
Below we will present some states and their taxes:
- Bahia – Progressive rate that varies from 3.5% to 8%;
- Federal District – Progressive rate that varies between 4% and 6%;
- São Paulo – Fixed rate of 4%;
- Santa Catarina – Progressive rate that varies from 1% to 8%;
- Pará – Fixed 4%.
How is the Tax amount calculated?
Now that you know how Donation Tax works, let's present a practical example of how it is applied.
Suppose you inherit a house worth R$ 500 thousand, already having your own.
Considering that the state tax rate is 4%, you will then have to pay R$ 20 thousand of ITCMD, the Donation Tax.
When does tax not need to be paid?
Although Donation Tax is a rule, it may not be applied in some situations, which we will address below:
- Work relationship:
It will not be necessary to pay tax if the asset you receive is linked to the donor's employment relationship.
Thus, if the money comes from life insurance, for example, you do not need to declare it.
Furthermore, items such as salaries, wages, remuneration, fees and other benefits that are the worker's right are exempt from tax.
It is worth remembering that social security benefits, which were pending to be received, are also tax-free.
– Donation of properties:
There are two situations that may result in you not paying the Gift Tax if you receive a property.
The first situation is that you, who will receive the donation, cannot have received more than one property and that this donated property will be for your own use, that is, you will live in it.
Another situation in which you may be exempt from paying is when you do not have any other property, only the one you live in and the value of the donated property is not greater than R$ 20 thousand.
This is the most difficult situation to happen, since it is difficult for a property nowadays to cost more than R$ 20 thousand.
– Donation in kind:
To avoid paying tax on the gift of money you received, the value cannot be greater than R$ 2 thousand.
Above this amount, payment must be made.
Now that you know how Donation Tax works, it is important to keep an eye on it and avoid paying more than you owe on the donated property.
If you have any questions, please get in touch so we can help you.
