The Federal Supreme Court (STF) decided this Monday (177), unanimously, that municipalities cannot set Urban Land and Property Tax (IPTU) rates based solely on the area of ??the property, that is, the size. The Court understood that the Constitution authorizes the progressive nature of the tax according to the value of the property, in addition to the adoption of different rates depending on the location and use of the property, but not due to its size. The decision was taken in the judgment of an appeal with recognized general repercussion, a mechanism that makes the understanding serve as guidance for similar cases across the country. The case analyzed by the ministers involved a law in the municipality of Chapecó, in Santa Catarina, which provided for a 1% IPTU rate for properties with a built area equal to or greater than 400 square meters.
STF decides that municipalities cannot charge IPTU at a higher rate due to the size of the property
The Federal Supreme Court (STF) decided this Monday (177), unanimously, that municipalities cannot set Urban Land and Property Tax (IPTU) rates based solely on the area of ??the property, that is, the size. The Court understood that the...
The decision was taken in the judgment of an appeal with recognized general repercussion, a mechanism that makes the understanding serve as guidance for similar cases across the country. The case analyzed by the ministers involved a law in the municipality of Chapecó, in Santa Catarina, which provided for a 1% IPTU rate for properties with a built area...
- The case analyzed by the ministers involved a law in the municipality of Chapecó, in Santa Catarina, which provided for a 1% IPTU rate for properties with a built area equal to or greater...
- The rule had been considered unconstitutional by the Santa Catarina Court, a decision against which the municipality appealed to the STF.
- When defending the rule, the city hall argued that a larger built area would represent more intense use of urban land and, therefore, would justify higher taxation.
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The rule had been considered unconstitutional by the Santa Catarina Court, a decision against which the municipality appealed to the STF. When defending the rule, the city hall argued that a larger built area would represent more intense use of urban land and, therefore, would justify higher taxation. Case rapporteur, Minister Dias Toffoli rejected this understanding. According to him, after Constitutional Amendment 29, of 2000, the Constitution began to allow tax progressiveness of IPTU based on the value of the property and the setting of different rates depending on the location and use of the property. In his vote, Toffoli stated that the area of ??the property is not among the criteria authorized by the Constitution for differentiated tax collection. The minister also highlighted that the Supreme Court has already consolidated the understanding that setting rates based on the area of ??the property constitutes progressiveness of the tax and not selectivity. Also according to the rapporteur, the area of ??the property cannot be confused with its value, its location or its use, and municipalities cannot create new criteria for progressiveness beyond those provided for in the Federal Constitution. Facade of the Federal Supreme Court (STF), in Brasília, with a statue of Justice highlighted. Disclosure/STF Fixed thesis At the end of the trial, the plenary approved the following thesis of general repercussion: "It is unconstitutional to establish, by municipal law subsequent to EC No. 29/2000, the IPTU rate based on the area of ??the property." ?What changes? The decision does not prevent cities from charging higher IPTU on more valuable properties. What the STF prohibited was the use of the size of the property, in itself, as a criterion for increasing the tax rate. According to the Court, the Constitution only authorizes the progressive nature of the tax based on the market value of the property and differences related to the location or use of the property.