The knowledge about the double-taxation agreements is essential to the internationalization of any company, not only that, it affects residents in Brazil who maintain revenues abroad and Brazilians living abroad. Those agreements ensure that the tax offices don’t charge the same income twice. In this article, we approach this issue and enlighten doubts on the objectives and importances of those treaties.
What are the double-taxation agreements?
Those agreements are international treaties to prevent that one’s income is taxed twice. The double-tax occurs as a result of a conflict between the fiscal competences of two States that legally can charge the same type of income. These agreements establish clear rules regarding which country has the right to tax specific types of income, such as salaries, dividends, royalties, and capital gains. In addition to preventing double taxation, these treaties also aim to combat tax evasion and fraud while ensuring greater legal certainty for investors and expatriates.
Brazil and its double-taxation treaties
Brazil has double taxation treaties with various countries, including Germany, Argentina, China, the United States, France, Japan, Portugal, the United Kingdom, among others. The complete list can be found on the website of the Brazilian Federal Revenue Service (Receita Federal). 1
These agreements largely follow the model established by the Organization for Economic Cooperation and Development (OECD). They are highly relevant for multinational companies, foreign investors, and expatriate professionals, as they help reduce the tax burden and mitigate the complexity of tax procedures across multiple jurisdictions.
The main benefits of these treaties include:
- Reduction of Tax Burden: Depending on the agreement, a foreigner may be taxed at a reduced rate or even be exempt from tax on certain types of income in Brazil.
- Avoidance of Double Taxation: If one country has already taxed the income, the other may offer exemptions or tax credits to prevent the taxpayer from being taxed twice on the same income.
- Greater Legal Certainty: The rules established in these treaties ensure predictability and fiscal stability for investors and foreign professionals.
Conclusion
Double Taxation Agreements play a crucial role in promoting legal certainty and reducing the tax burden for investors, companies, and foreign professionals in Brazil. Our firm specializes in providing expert legal advice on international taxation, assisting clients in accurately interpreting and applying Double Taxation Agreements. Our team offers strategic support to businesses and individuals seeking to optimize their tax burden and ensure compliance with applicable regulations. If you would like to better understand how these treaties may impact your tax situation, contact us for a personalized consultation.
André L. C. Delziovo
- https://www.gov.br/receitafederal/pt-br/acesso-a-informacao/legislacao/acordos-internacionais/acordos-para-evitar-a-dupla-tributacao/acordos-para-evitar-a-dupla-tributacao ↩︎
