International Succession: Progressive Estate Tax Changed It
Brazil’s mandatory progressive ITCMD, and its new express legal basis over foreign assets, make reviewing the succession design urgent.
Until 2025, a BRL 5 million estate in São Paulo paid exactly the same rate — 4% — as a BRL 500,000 estate. With the mandatory progressivity imposed by the tax reform, that has ended, and the tax on large estates is rising across practically the whole country.
And there is a second change, still less publicised: the complementary law that regulated progressivity also gave express legal basis for charging ITCMD on assets and rights located abroad — accounts, property, shareholdings — something that previously sat in a grey zone of state competence.
Anyone with international wealth who has not yet reviewed their succession planning is working from a rule that no longer exists.
What changed, and on what legal basis
Constitutional Amendment 132/2023, which enacted the tax reform, required ITCMD to become mandatorily progressive in every state and in the Federal District — ending the flat rates that applied in states such as São Paulo, Paraná and Minas Gerais.
The implementing rules came through Complementary Law 227/2026, enacted in January 2026, which:
- Confirms the national ceiling of 8%, in place since Senate Resolution 9/1992.
- Sets the tax base at the market value of the asset transferred, no longer only at scheduled or declared values.
- Gives express legal backing to charging on assets and rights located abroad — potentially widening the reach over shareholdings, accounts and property held outside Brazil.
Note on scope: despite the constitutional requirement, several states — among them São Paulo, Minas Gerais, Espírito Santo, Paraná and Bahia — had not, as at the research for this article, passed the specific state law adopting progressivity. There is no fixed constitutional deadline for that adaptation, and the applicable rate is the one in force at the date of death, not at the date of probate. We confirm the legislation in force in the state of the asset holder’s domicile before any definitive calculation.
Why this changes the arithmetic for international wealth
Progressivity specifically penalises consolidated wealth — exactly the profile that most uses international structures. A reform designed to make the system more equitable has, as a direct side effect, sharply raised the cost of not having active succession planning for large estates.
The explicit extension to foreign assets closes an ambiguity that, until now, worked in the taxpayer’s favour. Holdings in Uruguayan companies, accounts at international banks and property outside Brazil, which previously sat in a zone of less regulatory clarity as to state competence, now have a firmer legal basis for taxation — which reinforces, rather than removes, the need for correct legal design.
Variation between states remains relevant, but within narrower limits. Since all must move to progressive rates within the 8% ceiling, the difference between planning and not planning now weighs more than the difference between one state and another.
Where Uruguay fits into the design
Uruguay charges no specific tax on inheritance or gifts of assets situated outside its territory — which makes it a relevant, though not standalone, component of well-designed succession planning for families with internationalised wealth.
That does not mean “moving the wealth to Uruguay” resolves the succession equation on its own. It means that the jurisdiction of the holding company, the ownership design of the assets, and the timing of the transfer — during life or on death — are variables to be calculated together, not in isolation.
What changes, side by side
| Dimension | Until 2025 | From Complementary Law 227/2026 |
|---|---|---|
| Rate | Could be flat (e.g. São Paulo and Paraná at 4%) | Mandatorily progressive, 8% ceiling |
| Tax base | Often a scheduled or declared value | Market value of the asset |
| Foreign assets | State competence ambiguous in practice | Express legal basis for charging |
| Rate applicable at | Date of death (unchanged) | Date of death (unchanged) |
The vehicle most often misunderstood: the holding company
A well-structured holding company — in Brazil, in Uruguay, or in a combined design — is not, in itself, a tool for escaping ITCMD. It is an instrument of succession governance: it sets rules for management, for the succession of quotas or shares, and for bringing part of the transfer forward under known and planned tax conditions, rather than leaving the entire estate exposed to whatever rate applies at the unpredictable moment of death.
What this changes in practice for consolidated estates
- Reviewing succession planning has stopped being optional for anyone with consolidated wealth. Mandatory progressivity turns inaction — no structure, no planned gifting, no holding company — into a concrete financial decision with a measurable cost.
- The extension to foreign assets demands extra attention from anyone already holding internationalised wealth. Structures built on the premise of lower state exposure over foreign assets need reassessing in light of Complementary Law 227/2026.
- Lifetime gifting, already a common planning tool, gains additional weight — as a way of bringing the transfer forward under known tax conditions, before each state’s legislation finishes adjusting to mandatory progressivity.
Frequently asked questions
Is ITCMD already more expensive across all of Brazil?
Not yet uniformly. The progressivity requirement is constitutional, but each rate increase depends on specific state legislation — several states have not yet passed it.
Will assets I already hold abroad be taxed retroactively?
Complementary Law 227/2026 gave express legal basis for charging on foreign assets from its entry into force; application to specific, already-established situations requires case-by-case analysis.
Does Uruguay entirely exempt succession of international wealth?
Uruguay charges no specific tax on inheritance of assets outside its territory, but that does not, on its own, replace complete succession planning — which depends on the ownership design and on the home legislation applicable to the owner.
Is lifetime gifting still worthwhile after the reform?
It remains a relevant planning tool, particularly for bringing a transfer forward under known tax conditions — but the details vary with the state legislation in force and should be calculated case by case.
The starting point
A reform that looked technical — “make ITCMD progressive” — has a direct and immediate effect on any family with consolidated wealth: the cost of not planning has risen, and the ambiguity over foreign assets has narrowed.
If you hold internationalised wealth and have not yet reviewed the succession design in light of Complementary Law 227/2026, now is the moment — before the rate applying on the day of death is decided by chance rather than by planning.
One conversation is enough to map your case.
Informational content. It does not constitute legal, tax or investment advice. The rules cited were verified against the official sources indicated in July 2026 and may be amended or further regulated by state legislation. Individual situations produce different outcomes and should be analysed case by case.