The Levy of Income Tax and Tax on Inheritance and Donations (ITCMD) on Transactions with Trusts

Abstract

This study aims to analyze the levy of Brazilian Income Tax and Inheritance and Donation Tax (ITCMD) on trusts set up overseas by Brazilian residents (settlor) with beneficiaries resident in Brazil. For this purpose, it first examines the concept of a trust, a legal instrument not widely known and used by Brazilians, by defining its characteristics and identifying the different types of trusts. Then, it basically examines whether the transfer of assets from the settlor to the trustee is subject to ITCMD or not and whether the transfer of assets from the trustee to the beneficiaries could be deemed as a donation subject to ITCMD or an income subject to Income Tax.