Juliana Mello

Juliana Mello


The Brazil Business

Updated

Bruno Pedrozo

Everyday taxes in Brazil: IPVA, IPTU and IPTR

Juliana Mello

Juliana Mello


The Brazil Business

Updated

Living in Brazil means getting used to do a lot of calculations during the first months of the year. In this article we will get a closer look to three everyday taxes that are charged on assets.

It is expensive to be a Brazilian. According to the Tax Planning Brazilian Institute, Brazilians worked an average of 102 days in 2011 only to pay taxes, fees and contributions. The amount of money collected by Municipal, State and Federal Governments reaches BRL 1,51 trillion.

But what can we do? Nothing, except for a lot of math. Knowing well the taxes you pay is obviously the best way to avoid compromising the budget. The Brazilian Tax System is composed by 61 tributes divided in three categories:

  • Tributes charged on income (Ex: IRPF, INSS)
  • Tributes charged on assets (Ex: IPVA, IPTU, IPTR)
  • Tributes charged on consumption (Ex: ICMS, PIS, Cofins)

Imposto sobre a Propriedade de Veículos Automotores

This tax, called IPVA, is charged over the property of any automobile ground vehicle. Its annual payment counts from January and the value is calculated accordingly to the vehicle profile and its original state (the one written in the plate). To know how much you will pay on IPVA it is necessary to consult the local Detran's tables.

The aliquots in São Paulo state for 2012 are: 4% for flex and gasoline cars, 2% for alcohol, gas and electric cars, 2% for buses, minibuses and motorcycles and 1,5% for trucks. The percentages vary from state to state but usually cars pay more IPVA than other vehicles.

Explaining in values, a 2011 car with market value around BRL 30,000 has to pay BRL 1200,00 on IPVA. A 2008 truck with market value around BRL 800,000 pays around BRL 13,000. A 2009 Mercedez Benz SLR McLaren Roadster with market value BRL 2.317.699,00, has to pay astonishing BRL 92.707,96 on IPVA.

IPVA can be paid in a single payment (usually with a discount) or divided in up to three monthly installments. The local state Detran is responsible for charging the IPVA and selecting the payment expiration dates, which usually varies according to the final number of every vehicle's plate.

Another thing about Brazilian Vehicle Taxation is that older cars (15-20 years, depending on the state) do not pay IPVA. The explained logic is that the older the car, the more it has contributed to the government, so it can be dismissed from further charges.

Imposto sobre a Propriedade Predial e Territorial Urbana

The so-called IPTU is a municipal tax charged over the property of urban real estate. Its rate is calculated on the venal value of the urban constructed areas, which is determined by mass valuation. The basic unitary value of the square meter of lands and buildings will correspond to the value fixed in the Plants of Generic Values (Plantas de Valores Genéricos – PVG), elaborated through statistical processes and field work.

As IPTU is a municipal tribute, its rates vary significantly from city to city, as well as the maximum number of installments. This tax is paid every year, by the owner of the house, building or land plot. In case of rentals, it is a usual practice to include in the contract a clause passing to the tenant the obligation to pay the IPTU. Still, for the municipality, the legal debtor is the owner (the municipality will sue the owner, in case the tax is not paid).

Imposto sobre a Propriedade Territorial Rural

This is a tax charged on Rural Land, usually named ITR. It is a federal tribute, charged on any property outside the limits of urban areas. The rates are calculated over the total area (constructions or plantations do not influence the tax's value), depending also on the lands' degree of utilization. The land's owner has to fill an annual declaration online, that will generate the value to be paid.

Since 1990, the ITR's value is much higher for unproductive fields, in an effort to end speculation. The government's measure turned empty large fields no longer economically interesting, what contributed to the 90's agribusiness boom in Brazil.

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