An opportunity for ITBI restitution

The year 2020 was marked by numerous important tax decisions of the Federal Supreme Court (STF), mostly conducted in virtual plenary, without further debate and reflection between society and judges, and apparently not even among the judges themselves. Many of these important decisions had an outcome contrary to taxpayers, including the decision that, in August 2020, analyzed the scope of the tax immunity of the Tax on Transfer of Real Estate (ITBI) provided for in paragraph 2, I of article 156 of the Federal Constitution.

Under Extraordinary Appeal (RE) 796.376, the STF established the thesis of general repercussion according to which the immunity in question reaches only the value of the real estate property registered in a capital account. The result was negative for taxpayers, but it is possible to extract something potentially good from the ratio decidendi (i.e.: the basis of the decision) adopted in the winning vote of Justice Alexandre de Moraes.

In the concrete case, the corporate capital of a company, in the amount of R$24,000.00, was paid up through the conference of real estate assets in the total amount of R$802,724.00. The difference between these amounts, in the amount of R$778,724.00, was recorded as a premium in a capital reserve account in the company's net equity, while only the amount of R$24,000.00 was recorded in the capital stock account. The controversy, therefore, was precisely over the amount posted to the capital reserve account. The company claimed that the immunity from ITBI should be recognized on the transfer of real estate considering its total value, including the portion recorded in reserve.

In the STF judgment, the vote of the reporting justice Marco Aurélio, adopting a teleological interpretation, reached the conclusion that the entire value of real estate incorporated into the assets of a legal entity would be covered by immunity, even if the value exceeds the limit of its capital stock, since the purpose of immunity was to "facilitate the legal transit of assets, considering the social gain resulting from national development, a fundamental objective of the Republic (...)".

However, the opinion of Justice Alexandre de Moraes prevailed, according to which the immunity provided for in the first part of item I, paragraph 2, of article 156 of the Federal Constitution, reaches only the value of real estate used to pay-in capital stock of a legal entity. It does not reach eventual surplus values received as premium on subscription and registered in a capital reserve account. The thesis with general repercussion that was approved was as follows: "The immunity from ITBI, provided for in subitem I of paragraph 2 of article 156 of the Federal Constitution, does not reach the value of the assets that exceed the limit of the capital stock to be paid-in" (Theme No. 796).

We regret the decision because, among other criticisms, we understand that the immunizing rule encompasses the transmission of real estate as a whole, as long as it is made with the purpose of paying the subscribed capital, without the possibility of slicing up the value of the transmitted real estate.

The result is negative, but the grounds adopted by Justice Alexandre de Moraes in his vote are relevant.

Let's remember that the Federal Constitution determines that the ITBI is not levied on the "transfer of assets or rights incorporated to the patrimony of a legal entity as a capital realization, [first part] or on the transfer of assets or rights resulting from the merger, incorporation, spin-off, or extinction of a legal entity [second part], unless, in these cases, the main activity of the acquirer is the purchase and sale of these assets or rights, real estate rental or leasing.

Justice Alexandre de Moraes defends that the immunity from ITBI provided for in the first part of the constitutional provision, related to capital realization, is subject only to the limitation of the capital account, while the second part, which deals with the event of transfer of real estate "arising from merger, incorporation, spin-off or extinction of a legal entity", would suffer the limitation of the preponderant real estate activity. In other words, this exception, of the preponderant real estate activity, does not reach the first part of the provision, which is related to the payment of capital increase with real estate assets, which would only be limited by the amount intended for the corporate capital.

With this, the minister tried to rule out the argument of those who defend that the only exception to the immunity from ITBI would be the one linked to the preponderant activity of the legal entity receiving the real estate, explaining that this exception applied only to the final part of the provision, which deals with the transfer of assets through corporate reorganization.

Therefore, the STF has recognized, as a general repercussion, in the fundamentals of the decision, that the immunity from ITBI in capital increase transactions with payment in real estate or rights related thereto is unconditioned with respect to the activity of the receiving entity. In other words, in capital increase transactions involving real estate, ITBI is not levied on the amount paid in to corporate capital, regardless of the legal entity's preponderant activity.

This opens the opportunity for legal entities with real estate activities that have paid ITBI on capital increase transactions with real estate in the past to claim the refund of the tax paid, as well as to argue that, for transactions that are still to be carried out, ITBI should not be paid under these circumstances.