The Secretariat of Finance and Planning of the State of São Paulo (Sefaz-SP) began notifying thousands of taxpayers in June for the alleged non-payment of the Tax on Transfer of Cause of Death and Donation (ITCMD). The notifications are part of Operation Loki and represent the first large-scale supervisory action of this type, involving the cross-referencing of data from the Secretariat itself with those of the Commercial Registry and the Federal Revenue Service.
The notifications sent to taxpayers aim to promote self-regularization, without, at first, issuing fines or initiating tax actions. The communications were directed at individuals who, according to Sefaz-SP, were involved in irregular succession planning, simulating the sale of shares or stakes in companies—whether family or asset holdings—to transfer inheritance for free or at an underestimated value.
According to the notices from the São Paulo tax authority, there are indications that the transfers of shares did not occur between independent parties and could constitute a donation, subject to ITCMD taxation. In this first phase, the notices focus on operations carried out in 2020, but it is expected that the notifications will also include acts from subsequent years in the coming months.
For Sefaz-SP, the sale of shares to heirs should not be carried out for an amount lower than the net or asset value of the holding. In such situations, the Secretariat understands that there is a “simulation of the legal transaction,” where the purchase of shares for a lower value would characterize a donation disguised as a purchase and sale contract. This practice can result in a fine of 100%, in addition to a tax representation for criminal purposes for a crime against the tax order.