On May 13, the Brazilian Supreme Court unanimously decided to recognize the existence of general repercussions for Topic No. 1,214, represented by Extraordinary Appeal No. 1,363,013/RJ, which deals with the incidence of the Tax on Transmission Causa Mortis and Donations (ITCMD) on the Life Plans Generating Free Benefit (VGBL) and the Free Benefit Generating Plan (PGBL) upon the death of the holder. Thus, the Court will decide whether the incidence of the state tax on both funds is constitutional, having effects on all ongoing proceedings related to this issue.
The Extraordinary Appeal was filed by the State of Rio de Janeiro, with the aim of recognizing the incidence of ITCMD on the plans in question, since they would be part of the deceased holder's inheritance. However, the Superintendence of Private Insurance (SUSEP) understands that VGBL and PGBL plans are plans that have an insurance nature, since after a certain accumulation period, they provide holders with a monthly income, which may be for life, for a fixed term or even made in a single payment. While PGBL consists of a supplementary private pension plan, VGBL is a fund related to personal insurance, establishing an amount to be paid in the event of the holder's death, becoming incapacitated or being the victim of a personal accident.
The issue is not settled in the Courts. On the one hand, the 3rd and 4th Panels of the Superior Court of Justice (STJ) understand that the amounts cease to be part of the division of inheritance only when the holder starts to receive the amounts initially invested. According to this position, until payment is made, the PGBL and the VGBL could be taxed by the ITCMD. However, the 2nd Panel of the same Court understands that the VGBL, since it consists of personal insurance, should be excluded from the inheritance and that it could not be taxed by the ITCMD.
Thus, the judgment of Theme No. 1,214 of General Repercussion by the Federal Supreme Court will be important for the unification of case law on the matter for both funds, also linking all ongoing proceedings on the subject. The decision will have a major impact on private pension plans and personal insurance, which together raised approximately R$139 billion in 2021.
