Every holding company structured around real property goes, at some point, through the same act: contributing the property to its capital stock (capital social). It is also in that act — shielded by the Constitution from Brazil's real estate transfer tax, the ITBI — that the most recurring dispute between taxpayer and municipality takes root.
The dispute is not about whether the tax applies. It is about who gets to set the value on which it would otherwise apply.
The Question
The immunity under Article 156, §2, item I, of the Federal Constitution, covering assets contributed to a company's capital in a capital increase, is settled law.
What is not settled — and what is keeping courts busy in 2026 — is a prior question: can a municipality, on its own, replace the value the taxpayer assigned to the property in the contribution with its own, presumably higher table, and charge ITBI on the difference?
The Analysis
The Superior Court of Justice (STJ) has already answered this, in a binding precedent. In deciding Repetitive Theme 1,113 (REsp 1,937,821/SP, reported by Justice Gurgel de Faria, First Panel, unanimous judgment concluded on February 24, 2022), the Court held three points:
a) the ITBI's tax base is the property's value in an arm's-length market transaction;
b) the value declared by the taxpayer carries a presumption of accuracy, rebuttable by the tax authority only through a regular administrative proceeding, with an adversarial hearing, under Article 148 of the National Tax Code (Código Tributário Nacional, CTN); and
c) a municipality may not pre-set that tax base by reference to a value table it unilaterally established.
The 18th Public Law Chamber (18ª Câmara de Direito Público) of the São Paulo Court of Appeals (Tribunal de Justiça de São Paulo, TJSP) has applied that holding with a consistency that already amounts to a pattern of municipal conduct, not an isolated episode. In a case decided in August 2026, involving a holding company whose corporate purpose was exclusively to hold and control equity interests in other companies — with no trace of real estate activity —, the Chamber denied the municipality's appeal and upheld the ruling that had recognized the immunity. The tax authority had tried to replace the contribution's declared value with its own benchmark, without a prior administrative proceeding; the court did not allow it.
The Nuance
The rule does not apply identically to every scenario, and testing it against the exceptions avoids the most common mistake in this area: treating the immunity as a single, unconditional line. There are, today, three distinct controversies over the same tax — and conflating them is what most undermines the analysis of an actual case:
a) the predominant-activity test (Article 37, CTN), already settled law: when the company receiving the property was formed less than three years earlier, the immunity operates under a resolutory condition — activity is only assessed over the three years following the acquisition, and the municipality may resume charging the tax if, at the end of that period, real estate activity turns out to predominate. That was exactly the scenario decided by the same 18th Public Law Chamber of the TJSP, in August 2026, involving a newly formed holding company (Apelação — appeal — No. 1,044,361-97.2024.8.26.0114): the immunity was recognized, but expressly subject to the tax authority's right to reopen the assessment later — a different scenario from that of an established, pure equity-holding company, whose immunity is not subject to that future review.
b) STF Theme 796 (RE 796,376/SC), also settled: the immunity does not reach the value that exceeds the amount actually allocated to capital stock — a rule about value, not about the company's activity, and one that therefore applies to any holding company, real-estate-focused or not.
c) STF Theme 1,348 (RE 1,495,108), still open: it asks whether the predominant-activity requirement should exist at all. The judgment began in the virtual plenary, was moved to the in-person plenary at the request of Justice Flávio Dino on March 26, 2026, and resumed at the session of September 16, 2026. At that session, the reporting justice, Edson Fachin, voted for immunity regardless of predominant activity, capped at the value of the capital being paid up (Theme 796) and subject to proof of sham or fraud. Justices Cristiano Zanin, André Mendonça, Nunes Marques and Luiz Fux joined him. Justices Gilmar Mendes and Flávio Dino voted the other way, and Justice Alexandre de Moraes requested time to review the case. The judgment is not over, and votes may change until the result is announced. Until then, Article 37 of the CTN governs, as the state courts continue to apply it.
There is also a new front worth noting for its novelty, not its strength. In January 2026, as part of the recent tax reform on consumption (Reforma Tributária) — itself three years in the making, from Constitutional Amendment 132/2023 (Emenda Constitucional, EC) through Complementary Law 214/2025 (Lei Complementar, LC) —, Complementary Law 227/2026 amended Article 38 of the CTN to authorize municipalities to pre-estimate the ITBI's assessed value.
The City of São Paulo already invokes that change to argue that its own legislation on the subject — Articles 7-A and 7-B of Municipal Law 11,154/1991 — is now validated. The 18th Public Law Chamber of the TJSP rejected the argument, in an August 2026 ruling (Remessa Necessária — mandatory review — No. 1,038,096-34.2025.8.26.0053): those provisions had already been declared unconstitutional by the Court's own Special Body (Órgão Especial) in 2015, for violating the strict-legality principle, and a later federal statute cannot revive a municipal law already struck down — the municipality would need to enact a new one.
There is a further distinction that the federal change does not erase: a general rule, by definition, neither creates nor increases any tax — it only authorizes each municipality to do so, through its own law, subject to its own anteriority rule (a regra da anterioridade, which requires most new or increased taxes to wait until the next fiscal year and at least ninety days after publication before taking effect). A federal statute's validity and its concrete effect on any given taxpayer are, here, two different things.
Practical Implication
For anyone structuring, or who has already structured, a holding company around real property, the practical guidance follows directly from the rule: the value assigned to the asset at contribution, if documented on a market basis, should prevail. Any assessment of the difference against a municipal "reference value," without the tax authority first opening a regular administrative proceeding, is unlawful and subject to challenge — the warning holds in any municipality whose own legislation provides for a similar mechanism, even one set by statute rather than by decree.
That calls for a concrete step: anyone who has contributed real property to a company's capital in recent years — and paid ITBI on a value the municipality imposed, without a prior administrative proceeding — has real grounds to revisit that payment. The right to claim a refund of amounts paid in error is extinguished after five years, counted from the extinguishment of the tax credit (Article 168, item I, of the CTN), which occurs upon payment (Article 156, item I) and, for taxes subject to self-assessment, at the time of the advance payment (Article 3 of Federal Complementary Law No. 118/2005). It is a deadline that runs quietly, for as long as no one reopens the account.
Read together, what these rulings make clear is that immunity on a capital contribution was never a single line: it is a composite of at least three variables — how long the company has existed, the nature of its corporate purpose, and the procedure the municipality did, or did not, follow to challenge the declared value. Overlooking any one of them turns a solid immunity into an uncalculated risk.
