Brazil Inheritance Tax Changes Spur Wealthy Families to Accelerate Estate Planning
Wealthy Brazilian families are rushing to transfer assets in 2026, anticipating significant increases to the Imposto sobre Transmissão Causa Mortis e Doação (ITCMD), the country’s inheritance and gift tax. A new law, enacted in January 2026, is poised to raise the cost of inheritance and increase the potential for legal disputes, making this year a critical window for proactive estate planning.
New Tax Rules and Valuation Methods
Complementary Law No. 227/2026, published in January, is driving the urgency. A key change is the shift in how assets are valued for tax purposes. Previously, valuations often relied on historical book value. The new regulations mandate the leverage of fair market value, including intangible assets like goodwill .
This change is particularly impactful for holding companies with portfolios of real estate, stocks in family businesses, or other significant assets. The valuation of non-traded shares will now be based on a technically sound methodology, with a minimum valuation tied to adjusted net equity plus goodwill . The inclusion of goodwill, representing intangible value like future earnings potential and brand recognition, further complicates assessments.
Potential Tax Increases: A Concrete Example
Law firm Cescon Barrieu illustrated the potential impact with a simulation involving a São Paulo-based asset holding company. Currently, with assets valued at R$7 million (R$5 million in properties and R$2 million in financial investments), a donation of shares would incur an ITCMD of R$280,000, based on a 4% tax rate applied to the net worth .
Under the new regulations, revaluing those same assets at market price could dramatically increase the tax liability. The properties could be valued at R$25 million, with an additional R$3.2 million attributed to goodwill, resulting in a tax base of R$30 million. At the same 4% rate, the tax would jump to R$1.2 million. If São Paulo adopts a progressive tax system with a maximum rate of 8%, the tax could reach R$1.95 million – almost seven times the current amount.
State-Level Variations and the Race Against Time
While the federal law provides the framework, individual states are responsible for implementing the new rules. This creates a patchwork of regulations, with varying tax rates and valuation criteria. São Paulo, currently offering a favorable 4% flat rate and allowing the use of book value, is expected to witness a significant impact from the changes .
Conversely, states like Bahia already align with the new federal regulations, using appraised market values for tax calculations. Other states, such as Minas Gerais and Rio de Janeiro, are already moving towards market-based valuations. The window of opportunity lies in the period before these state-level regulations are finalized, expected in 2027.
Increased Costs Beyond Taxes
The new rules will likewise increase the costs associated with estate planning. Taxpayers will need to engage independent appraisers, auditors and consultants to justify asset valuations and defend against potential challenges from tax authorities . This is expected to lead to increased tax litigation, particularly regarding the valuation of intangible assets and operating companies.
What Families Should Do Now
Experts recommend that families begin analyzing their estate planning strategies immediately. This includes assessing the real value of their companies, determining fair valuations for long-held assets, and evaluating the timing of potential donations. For those considering donations, it’s crucial to ensure the company is prepared and that heirs are ready to receive the assets.
Alternatives to outright donations, such as life insurance and retirement plans, are also being explored to address liquidity concerns and mitigate the impact of higher future taxes. Proactive organization and professional guidance are essential for navigating the evolving landscape of Brazilian inheritance tax law.