The Superior Court of Justice (STJ) denied, by a majority vote, an individual’s right to income tax exemption on capital gains from the sale of a corporate interest. The taxpayer inherited the shares from her father and later sold them to a third party.
The prevailing argument was the dissent filed by Justice Herman Benjamin. The judge noted that Article 4 of Decree-Law 1,510/1976, which granted the exemption to investors who held the shares for at least five years and was later revoked by Law 7,713/1988, only provided for the exemption for the first transaction—the transfer of shares to heirs—and not for the second transaction, the sale of shares by heirs to other parties.
Therefore, the Court concluded that the exemption is strictly personal in nature and, therefore, cannot be transferred to the heirs. Thus, the capital gains from the sale of shares by the heirs are not exempt from IRPF.
