By JK Capital | August 2026
In conversations with owners of mid-sized businesses, the most common issue is not a lack of assets. It is a lack of governance to decide what to do with them. We often encounter families who leave succession to be dealt with later. For decades, "later" was an acceptable answer. Distributing profits was tax-free, gifting assets was cheap, and the topic could always wait for the next urgent problem. Starting in 2026, "later" has a price tag.
In practice, many mid-sized companies operate with unresolved succession issues: no family protocol, no shareholders' agreement, no defined dividend policy, and no clarity on who decides what when the founder steps down. Only about 30% of family businesses survive the transition to the second generation, and less than 10% make it to the third.
Two changes that altered the math
Passed almost in parallel with the debate on consumption taxes, these measures changed the playing field. Law 15,270, from November 2025, ended nearly thirty years of tax exemption on profits and dividends: there is now a minimum tax of up to 10% for those with an annual income above R$ 600,000. The ITCMD, which is part of the Tax Reform, has changed in nature: Constitutional Amendment 132/2023 made its progressive rates mandatory, with a cap of 8%, and Complementary Law 227/2026 changed the tax base from historical or book value to market value.
Taxed dividends reopen a capital allocation decision
When dividends were exempt, moving profits to the individual owner was almost always the default choice. Now that distributions are taxed, the question is back on the table: shouldn't a portion of the earnings remain in the company, or a holding company, to finance expansion, an acquisition, or a new group venture, instead of being distributed and taxed?
An important caveat: retaining capital only creates value if the company generates returns above the shareholder's best alternative. Otherwise, leaving profits in the business merely defers the tax and masks poor capital allocation.
With the ITCMD, the increase comes from the tax base
The second change has a significant yet quiet impact. For example: a family buys one thousand hectares of farmland in Mato Grosso in the early 2000s, in a region that would later consolidate, paying around R$ 3,000 per hectare, for a total of R$ 3 million. In the following two decades, land prices in Mato Grosso skyrocketed: in hubs like Sorriso, the price per hectare jumped from a few thousand reais to over R$ 50,000, an eighteen-fold increase in twenty years. Today, the same farm would be worth nearly R$ 50 million.
Under the old rules, the ITCMD on the transfer would be based on the historical or declared value, close to R$ 3 million; at 4%, that's R$ 120,000. Under the new rules, with a market-value base and a progressive rate up to 8%, the tax is calculated on R$ 50 million, and the bill could reach R$ 4 million. Even if the rate remained at 4%, the change in the tax base alone would increase the tax from R$ 120,000 to R$ 2 million. The asset is the same; what changed was the yardstick.
With company stakes, the problem gets more serious
With land, there are comparables and the value is verifiable. The law mandates market-value assessment and, for non-traded shares, requires a methodology that at least reaches the market-adjusted net equity plus goodwill. Anyone in M&A knows the number of variables and assumptions that shift based on subjective perspectives. Valuation is a range of values.
By anchoring the tax to "market value," the rule puts the State in the position of setting a figure that the market itself prices within a wide range, opening a front for uncertainty and litigation: the taxpayer commissions the appraisal, bears the burden of defending it, and may still have the value assessed by tax authorities. For those transferring assets, it means planning for an uncertain target and paying tax on market value even without a liquidity event.
What's left can't be solved with a board resolution
While 2025 saw a rush to declare dividends, what was left for later is harder. Redesigning a holding company or bringing heirs into the partnership early forces answers to questions the family had been avoiding: who has the final say and what happens to the son who doesn't work in the business.
Ultimately, none of this is new for these families. The conversation about control and succession was always there, avoided during Sunday dinner, pushed to a "later" that never came. What the reform did was remove the luxury of postponement: it didn't create the governance problem, it just set a date and attached the bill. Those who don't have this conversation at home will have it later, at a higher cost, during probate.