Reciprocal Tax Immunity — a constitutional prohibition
Reciprocal tax immunity is a constitutional prohibition (Article 150, VI, "a" of the Federal Constitution) barring the Union, the States, the Federal District and the Municipalities from imposing taxes on one another's property, income or services. A cornerstone of Brazilian federalism, it extends to public-law authorities (autarquias), public foundations and certain state-owned entities that provide public services.
Scope of the immunity
- Federative entities: direct immunity — the Union, the States, the Federal District and the Municipalities.
- Public-law authorities and public foundations (Article 150, §2): extended immunity, provided they are tied to an essential public purpose.
- State-owned companies and mixed-capital companies: as a general rule, NO immunity. Exception: providers of public services under an exclusivity regime (e.g., ECT — the Brazilian Post Office, per the STF) and certain specific concessionaires.
- Private public-service concessionaires: NO immunity — they pay taxes normally.
Frequent case-law disputes: public hospitals, privatized federal universities, special-purpose entities, companies controlled by state-owned enterprises.
Which taxes the immunity covers
Reciprocal immunity covers only taxes (impostos) — it does not reach fees (taxas), betterment levies, social contributions or compulsory loans. Examples:
- Immune: IPTU (urban property tax) on real estate owned by the Union, IPVA (motor vehicle tax) on a vehicle owned by a State, ITBI (real estate transfer tax) on an acquisition by a Municipality.
- NOT immune: the public-lighting fee, the social security contribution (INSS), the sanitary-inspection fee.
Under the Tax Reform, IBS and CBS do NOT affect reciprocal immunity — transactions between public entities remain immune (Supplementary Law 214/2025).
Frequently asked questions about reciprocal tax immunity
Do state-owned companies (Petrobras, Banco do Brasil) have reciprocal immunity?
As a rule, NO. State-owned companies that engage in economic activity (Petrobras, Banco do Brasil, Caixa) do not have immunity — they pay taxes normally. Exception: state-owned entities that provide a public service under an exclusivity regime (the Post Office/ECT, per the STF) do have immunity. Judicial disputes regarding each specific state-owned entity continue.
Is reciprocal immunity absolute?
No. The immunity reaches only property, income and services tied to the entity's essential purposes. Parallel business activities (commercial leasing of public real estate, sale of goods) may be taxed. The analysis is case-specific — it requires verifying the purpose of the asset or activity.
Can a Municipality levy IPTU on real estate owned by the Union?
No, this is barred by reciprocal immunity. Only FEES for a specific and divisible public service (waste collection, lighting) may be charged. An improper IPTU charge can be challenged through a writ of mandamus or an ordinary action for refund of undue payment.
Does the Tax Reform preserve reciprocal immunity?
Yes. Supplementary Law 214/2025 (the implementing law for CBS/IBS/IS) fully preserves the constitutional immunities, including the reciprocal one. Transactions among the Union/States/Municipalities and their public-law authorities remain immune from CBS and IBS — with no structural change from the Reform.