Impacts of VGBL taxation on beneficiaries
According to the Brazilian Federal Revenue Service, only the portion paid as compensation for the insured's death would be exempt. However, the amounts accumulated in the plan over time, even when received by beneficiaries after death, would be taxed on the earnings.
With this understanding, the Federal Revenue Service limits the scope of the exemption provided for in Law No. 7,713/1988, which exempts from Income Tax amounts received due to death or disability. According to the law, insurance payments made by private pension entities in these cases are exempt, which reinforces the discussion about extending this protection to VGBL plans.
In practice, this stance reduces the scope of the exemption in these cases, by disregarding the fact that, for the taxpayer, VGBL is normally seen as a single product, with an insurance nature, and not as separate parts with different treatments.
Furthermore, the Complementary Law No. 227/2026 This reinforces the point that there is no ITCMD (Inheritance and Gift Tax) levied on amounts paid into private pension plans, indicating that these amounts should not be treated as inheritance.
The Brazilian Supreme Federal Court has also recognized, in its ruling on Case 1214, that VGBL (Variable Life Insurance with Guaranteed Benefits) is not the same as inheritance, reinforcing its insurance nature. Although this decision deals with ITCMD (Inheritance and Gift Tax), it contributes to the discussion about the taxation of these values in general.
Given this scenario, there is room to question the interpretation of the Federal Revenue Service, especially regarding the taxation of amounts received by beneficiaries of VGBL plans.
Our team The Tax Law Department remains available to clarify doubts and assess any potential impacts of this understanding in specific cases.
