Brazil’s Supreme Federal Court (STF) unanimously ruled that a São Paulo state law permitting the collection of the Motor Vehicle Ownership Tax (IPVA) on rental company vehicles—when the tax had already been paid in another state—is unconstitutional.
The decision stems from a lawsuit filed by the National Confederation of Trade in Goods, Services and Tourism (CNC), which challenged São Paulo Law No. 13,296/2008. The contested provision treated the act of renting or making a vehicle available for rent in São Paulo as the taxable event (fato gerador), regardless of prior IPVA payment in the vehicle’s original registration state.
The STF determined that the correct basis for IPVA collection is the state where the taxpayer maintains its headquarters or tax domicile. For rental companies, vehicles remain fiscally linked to the owning entity rather than the lessee, the court found. The ruling effectively prohibits duplicate taxation on rental fleets already subject to IPVA in their home states.
The case gained prominence after rental operators, including Brazil’s largest car-rental company Localiza and second-largest Movida, faced repeated IPVA assessments in São Paulo despite prior payments elsewhere. The decision applies retroactively and may entitle affected companies to refunds for overpaid taxes.
The STF’s ruling was published on August 26, 2026.
