The Jockey Club of São Paulo was founded in 1875 and first operated at Mooca. In the 1930s, a deal was made, in which Companhia Cidade Jardim donated property on the banks of the Pinheiro River to the new racecourse. In a recent article in ConJur, lawyer Igor Mauler Santiago presented points of conflict in the relationship between Jockey and the municipal government.
At this time, the Municipality of São Paulo bought its headquarters in Mooca from Jockey for an amount similar to the expenses for the construction of the new property, with money placed in the Bank of Commerce and Industry of São Paulo. With the amount deposited, the institution was forced to build the Hipódromo Cidade Jardim, completed in 1941.
While the Jockey needed to maintain the operation of the turf and anticipated a reversal of the land and its constructions to the municipality, in an eventual end of the club. At the end of the 1959s, the sentence was given, exempting the Hippodrome from paying the IPTU (city´s property tax) from the reversal term.
With the intention of giving permanent effect to this resolution, the Jockey bumped into Precedent 239 of the STF. The ruling was upheld, albeit by another argument – article 32 of the CTN, edited after the issue became final – in the club’s divergence embargoes.
As such, the link between the club and the municipal administration is quite chaotic, with significant amounts being released each year, tax foreclosures and attempted settlements.
However, with the 1959 sentence, Article 32 of Law 5.172, of 10.25.66 (CTN) does not overlap, the STF (Supreme Federal Court) ruling based on this rule does not survive two laws subsequent to the Code, none of which was evaluated by the Supreme. Are the following:
Decree-Law 57, of 18.11.66
Urban properties are taxed by municipal governments and rural properties by the Federal. CTN establishes urban and rural property based on geographical criteria. That is, the urban property is located in the urban part of the municipality according to local law, while the rest are rural properties.
It is understood that this is not the only point in force in Brazil. There is still the destination criterion defined by Decree-Law 57/66, subsequent to CTN and also understood as a complementary law. According to art. 15, art. 32 of the CTN “does not cover the property that, evidently, is used in extractive plant, agricultural, livestock or agroindustrial exploitation, thus affecting, on the same, the ITR and other taxes charged with it”.
Therefore, the concept of rural activity is proposed by IN / RFB 1,700 / 2017, in the section that defines the calculation of the IRPJ and CSLL. Therefore, rural activity is defined as the whole animal culture, excluding awards received by owners, producers and professionals of the turf. The reference to the turf shows that the federal legislation places it as a rural activity, except for the possible prizes.
This latter position is still highlighted by Law 7,291 / 84, which “provides for equine culture activities in the country” and places the horse in this concept. In addition, the turf appears in 14 of its articles. Therefore, if lending to equideoculture, the Jockey performs a rural activity, being subject to ITR and not to IPTU.
Municipal Law 6,989, dated 12.29.66
Are free of property tax, one of the parts of the IPTU, “the buildings built belonging to the heritage of sports associations, effectively and habitually used in the exercise of their activities, provided that they do not sell‘ poules ’or betting slips”.
The limitation of the scope of the exemption of the final part of the standard is not constitutional by the points shown. Each sports association has a purpose: some opt for football, another for swimming, horseback riding, basketball and so on, there are some clubs that draw attention to more than one sport.
The turf is a modality as deserving of protection as the others, and the norm that regulates it treats the exploitation of bets as an inherent activity (Law 7,291 / 84, articles 6 to 9), the result of which the Union has a share, with the National Horse Breeding Coordinating Commission (ACPC).
Constituting this activity, bidding for such sports, due to the refusal of the exemption corresponds to “instituting unequal treatment between taxpayers who are in an equivalent situation”, according to “professional occupation or function performed by them”, against articles 5, caput , and 150, item II, of the Constitution.
The disparity taken by the regional rule is clear when one takes into account that the practice of betting already entails another municipal tax (ISS), as determined by the Supreme Court on appeal from the Jockey Club of Rio de Janeiro. This means that the bets already result in the Jockey having a tax duty, ensuring the municipal government a share in the gains.
This is a distinguishing situation that is based on an accessory activity carried out by the taxpayer (exploitation of bets linked to the turf), especially when its link with the activity stems from the law and already results in the duty to pay a tax to the same Tax Authorities which aims at removing the exemption referring to another (IPTU).
In pointing out this action as a reason for denying the exemption, the Municipal Administration also takes a contradictory stance, because it helped in the construction of the site and agreed that it was intended for the practice of turf – which is presumed to be betting – and now wants to point out as a reason reap the exemption granted to all clubs.
In general, the collection of IPTU tax in exorbitant amounts is a way of taxing the club’s financial incapacity and ending its activities, with the reversion of the racecourse to the city’s heritage. It is basically missing the word given.
In addition, according to the Constitution (article 187), agricultural policy will be carried out in the form of a law. The article establishes a period of 365 days for its edition, which resulted in Law 8,171 / 91, which establishes the role of the Union in defining the theme, reserving to the other entities merely executive functions.
Bets cannot generate loss of exemption to Jockey
Therefore, by linking a negative possibility (the loss of the exemption from the IPTU) to the practice of betting, which the Union establishes as sovereignly intrinsic to the turf and, because, in equideoculture, the municipal law conflicts with federal competence, crossing not only Laws 7,291 / 84 and 8,171 / 91 – which would be enough for their invalidity – as well as Article 187 of the Charter.
Since turf is a sport, Law 7,291 / 84 is established as a general measure of sport, surpassing state and municipal standards. This points to an extra reason to invalidate the municipal law that preaches the loss of the exemption to the taxpayer who does nothing more than perform the right to exploit betting activity that fits him according to the norm of the Union.
Although the tourist clubs have the possibility to keep up to 38% of the total amount of bets – a ceiling that the Jockey cannot reach -, the use is not free. Article 10 of Law 7,291 / 84, defines that at least 97% (Article 54 of Decree 96.993 / 88 increased this index to 99%) of betting resources and other tourist revenues will be directed to bear the costs of the practice of the turf, such as prizes to bettors, breeders and professionals of the sport, leaving 3% of these values to cover general expenses of properties, such as IPTU.
In other words, this legal charge shows the disparity in the amounts demanded by the municipal government against Jockey. Ultimately, Hipódromo Cidade Jardim needs to bear ITR and not IPTU. If the property eventually ends up subject to the same municipal tax, the Jockey must have the exemption from charging that applies to all sports associations, and the restrictive clause practiced by local law is unconstitutional.