After the death of a person, a process must start to allow the transfer of that person’s property to those who are entitled to receive them, who are the heirs or beneficiaries of the inheritance.
This process, however, may be different depending on the country where the death took place because each place has its own laws and specificities.
In this article, we are going to establish a comparison between the proceeding of family succession in Brazil and Portugal, as well as highlight the advantages which Brazil offers for the succession process started in its territory.
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Author: Lucas Gomes Furtado
How much is the inheritance tax rate in Brazil and in Portugal?
Generally, after the death of a relative, the heirs or beneficiaries who will inherit their estate are also responsible for the payment of inheritance tax.
This usually happens in several countries around the world, and each of them has its own specific rules regarding the payment and charging of this tax.
In Brazil, the inheritance tax is named ITCMD (Imposto sobre transmissão causa mortis e doação) and must be paid whenever there is the transfer of goods or transfer of rights, in case of death or donation.
In our country, each federative state determines its inheritance tax rate and how it will charge it, but the percentage must not be higher than 8% of the market value of the property.
This means that, according to Brazilian law, there cannot be an inheritance tax rate higher than 8% in relation to the value of the property transmitted to the heirs after death.
Inheritance tax and Stamp duty
In reality in Portugal, there is no such “inheritance tax” anymore. The succession tax, which was its name, was abolished by the Portuguese government in 2004.
However, there still is a tax named “imposto do selo” (“stamp duty”), which is known for being the oldest tax in the Portuguese tax system.
The stamp duty tax is owed in many different situations, including when there is a transmission of property free of charge, such as inheritance and donations, as long as the movable or immovable property is located in Portugal.
Taking into consideration the transmission of property, the tax rate is 10% on the value of the property, and it must be paid by any heir or beneficiary that is not legitimário, or legítimo, as we say in Brazil.
This means that descendants, ascendants, and the surviving spouse or partner are exempt from paying the tax, but other heirs such as siblings, uncles/aunts, and cousins must take on the cost of the tax.
How does the division of property work in Portugal?
As it also happens in Brazil, there is an order of preference among heirs in Portugal, for them to be able to receive property from a deceased relative.
Therefore, the legitimate heirs – the descendants, ascendants, and the surviving spouse – will always have the preference to receive the estate.
This happens because there is a portion of the deceased’s estate, which is called quota legítima, that must necessarily be left for these heirs by law. This portion may vary from one-third to one-half of the inheritance, depending on who and how many heirs there are.
Besides that, it is important to remember that the existence of closer relatives always excludes the most remote ones from inheriting any portion of the estate.
In general lines, in Portugal, the following order of preference to inherit must be followed:
descendants and the surviving spouse;
- if there are no descendants, the descendants, and the spouse;
- if there are no ascendants, only the spouse;
- if there are no descendants, ascendants, or spouses, the collateral relatives up to the fourth degree of kinship, such as siblings, uncles/aunts, nephews/nieces, and cousins.
Are there any obstacles or prohibitions to inheriting in Portugal?
According to Portuguese law, it is possible to prevent an heir from inheriting in certain situations, in a practically identical way to how it happens around here.
In Brazil, heirs may lose the right to receive any inheritance in very specific scenarios, such as unworthiness, disinheritance, and the existence of debts that are equal or higher than the amount of the inheritance.
Therefore, in our country, an heir will be considered unworthy if they commit any act against the life or the honor of the owner of the estate, or even against their freedom to make a will.
In Portugal, the heir who is found guilty of the crime of murder or attempted murder, false accusation, or false testimony, in relation to the estate owner or their spouse, descendant, ascendant, adopter, or adoptee.
Besides that, in a European country, an heir may also be considered unworthy if they induce or force the estate owner to create, revoke, or modify a will, or if they have hid or falsified a will.
Brazil and Portugal
Both in Brazil and in Portugal, it’s necessary to file an unworthiness lawsuit in court, and the heir will be considered unworthy only after the final judicial ruling.
When it comes to disinheritance, a Brazilian heir may be disinherited in the same aforementioned situations, or if they commit a physical offense or serious injury, have illicit relations with a stepfather or stepmother, or fails to assist their sick ascendants.
Comparatively, in Portugal, an heir may be disinherited if they are convicted of a crime against the person, the property, or the honor of the estate owner or one of their relatives, or of false accusation, as well as if they refuse to pay support for them without justification.
In both countries, the disinheritance of an heir must be mentioned in a will by the estate owner, with clear justification in the document, for it to be considered valid.
What are the advantages of starting a family succession in Brazil?
When we examine the Brazilian laws, we can notice that our country brings several advantages to the people who decide to start their family succession here.
In Portugal, although there is no inheritance tax anymore, the heirs may have to take on the costs of the stamp duty tax, whose percentage related to inheritance is 10% of the value of the transmitted property.
As it was mentioned before, the inheritance tax rate limit of ITCMD in Brazil is 8% by law.
Besides that, one of the benefits brought by Brazilian law is the possibility that the estate owner can get a private pension plan.
That is because the private pension plan holder can define how the division of this money will happen after their death by naming any person they want as a beneficiary to receive them.
According to Brazilian law, most federative states do not charge ITCMD on the amount of money left in private pension plans because it is not part of the inheritance and does not need to be included in the inventory proceeding.
In other words, this amount of money related to private pensions can be received by the beneficiaries irrespective of the course and the conclusion of the inventory proceeding.
On the other hand, another interesting possibility that may be beneficial in Brazil is the creation of a holding company by the owner of the estate.
In this kind of company, it is possible to plan the management of property and/or other companies by the company partners.
There, particular goods belonging to natural people will be gathered and start belonging to the holding company, although still managed by the partners.
An advantage of holding companies is having more safety and better planning of the property that belongs to it, which will also be divided according to the owner of the estate’s wishes, after their death.
Another positive aspect of this kind of company is related to the taxation on the holding, which is usually considerably lower than what the law determines on natural people.
In both scenarios, a holding company allows for a less expensive, less bureaucratic, and more simplified way to conduct the succession family process, as everything has been planned in advance.
Therefore, as we can see, bringing property from other countries to Brazil with the intention of planning a family succession may be an attractive decision for whoever owns property abroad, given the benefits of Brazilian legislation.
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