Anni Varanda, Autor em GSGA

Brazilian Tax Review – February 2019

Posted on 12 de February de 2019 by Anni Varanda

FEDERAL REVENUE OFFICE ISSUES IMPORTANT NEW REGULATION ON TRANSFER PRICING

The recent Normative Ruling 1,870/2019 has amended Brazilian domestic legislation on transfer pricing, clarifying some details on how it is calculated. These include the correct assessment period, taking into account the characteristics of each arm’s length method, and how the adjustment must be added back to the corporate income tax calculation basis.

Additionally, the new legislation also clarified some aspects of items that must compose the practiced price and/or the arm’s length price, such as freight and insurance, as well as the initial inventory.

Finally, the divergence margin calculation was changed for the 2019 calendar year to align domestic procedures with international practices.

DEADLINE FOR ULTIMATE BENEFICIAL OWNER DISCLOSURE HAS BEEN EXTENDED BY THE BRAZILIAN TAX AUTHORITIES

Aiming to comply with the OECD/G20 Base Erosion and Profit Shifting (BEPS) approach and to create greater transparency in its business environment, the Brazilian Government has passed legislation requiring companies incorporated in Brazil to identify their ultimate beneficial owners and report them to the local tax authorities.

Originally, these companies would have to report their ultimate beneficial owners by December 31, 2018. However, Normative Ruling 1,863/2018 has extended this deadline by 180 days, so ultimate beneficial owners will have to be reported to the local tax authorities by the end of June of 2019.

BRAZIL AIMS TO INCREASE ITS DOUBLE TAXATION CONVENTION NETWORK

In November 2018, Brazil and the United Arab Emirates signed a Double Taxation Convention, which still has to be approved by the Brazilian Congress and promulgated by a Presidential decree in order to become effective.

In addition, the Brazilian government is negotiating a Double Taxation Convention with the Czech Republic, as well as amending protocols to the existing agreements with Mexico and Canada, aiming to adapt them to the BEPS’s minimum standards.

BRAZIL REGULATES THE DISPUTE RESOLUTION MECHANISMS PROVIDED FOR IN DOUBLE TAXATION CONVENTIONS

The Mutual Agreement Procedure (MAP) is a mechanism to resolve disputes arising from Double Taxation Conventions. Although all of the Brazilian Double Taxation Conventions contain MAP clauses, there was no domestic legislation regulating the subject in Brazil until the enactment of Normative Ruling 1,669/2016.

This legislation was recently replaced by Normative Ruling 1,846/2018, which complies with the minimum standards of BEPS Action 14 and is a result of public consultation and consequent suggestions from taxpayers.

SEEKING MORE INTERNATIONAL COOPERATION, NEW TAX INFORMATION EXCHANGE AGREEMENTS HAVE BEEN APPROVED BY THE BRAZILIAN CONGRESS

The Tax Information Exchange Agreements signed by Brazil and Switzerland and Jersey were approved by the Brazilian Congress at the end of 2018. These agreements must still be promulgated by presidential degrees before they become effective.

TAX AUTHORITIES PROVIDE OBJECTIVE CRITERIA TO IMPOSE JOINT AND SEVERAL LIABILITY ON COMPANIES’ MANAGERS AND SHAREHOLDERS

The Brazilian Federal Revenue Office has issued Normative Opinion 4/2018, which provides some objective criteria and conditions to impose joint and several liability on companies’ managers and shareholders.

These individuals can be considered jointly liable for a company’s tax liability only if a common interest in the event is proved. However, anyone who participates in tax planning that is considered abusive may be held liable for the corresponding tax obligations, which is a very controversial interpretation considering the National Tax Code.

It should be noted that this Normative Opinion is not binding on tribunals and courts and should be challenged if its application violates tax law.

BRAZILIAN FEDERAL REVENUE OFFICE HAS ESTABLISHED A NEW DEFINITION OF SERVICE EXPORTS

The Brazilian Federal Revenue Office has issued the Normative Opinion 1/2018, which provides a new definition of service exports for tax purposes. Domestic tax law grants favorable tax treatment to service exports; however, there are several different definitions for these transactions, according to the legislation governing each type of tax.

The tax authorities adopted the destination principle and stated that the service export occurs when a service provided by a Brazilian resident is consumed abroad. For instance, if a service provided by a Brazilian resident is applied to real property located abroad, the transaction characterizes as a service export, even if the hirer is also a Brazilian resident.

Notwithstanding, Normative Opinion 1/2018 expressly states that new definition does not apply to the taxes for which legislation has already provided a specific definition. Therefore, the new definition does not apply to PIS and COFINS, ISS and ICMS-Communication taxes.

CONDITIONS TO EXEMPT THE CHARTERING OF FOREIGN VESSELS FROM THE WITHHOLDING INCOME TAX ARE CLARIFIED BY TAX AUTHORITIES

According to the Private Letter Ruling 166/2018, payments from Brazilian residents for chartering foreign vessels are exempt from withholding income tax, as long as the transaction was approved by regulatory authorities and the beneficiary is not a resident of a tax haven (black list) and does not benefit from favored tax conditions (gray list).

Moreover, the withholding income tax exemption applies even if the payment is not made by the Brazilian hirer but by a third party on its behalf.

BRAZILIAN GOVERNMENT REGULATES TAX BENEFITS FOR R&D INVESTMENT

Posted on 19 de November de 201819 de November de 2018 by Anni Varanda

Companies that provide certain types of IT goods or services to the Brazilian market are granted tax benefits under Federal Law 8,248/91 when they prove they invest a minimum of 5% of their annual revenue in R&D activities.

The Brazilian government regularly publishes a list of the eligible goods and services, which includes electronic components, semiconductors, digital devices and software. Domestic production is mandatory.

In some cases, the tax benefits provided by Law 8,248/91 (also known as “Lei de Informática” – the IT Act) can mean a reduction of as much as 95% of the Excise Tax (Imposto sobre Produtos Industrializados – IPI).

More recently, the Brazilian Congress passed Federal Law 13,674/2018, which introduced certain changes to the IT Act, in order to allow that a portion of 2.7% of the overall 5.0% R&D investment required be made via Investment Funds – Fundos de Investimento em Participações (FIPs) that invest in technology companies.

A FIP is a closed-end fund that is intended for the acquisition of shares, securities and any other bonds or notes that are convertible into shares of either publicly-traded or closely-held companies.

On November 13, the Brazilian government issued Ordinance 5,894, which establishes certain conditions for R&D investments through FIPs so that companies can benefit from the tax breaks provided by the IT Act. The conditions required include, among others:

The FIP must be registered with the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM)
The FIP’s investments must last for a maximum period of 6 years.
The FIP must qualify as an “investment entity” for the purposes of CVM Ordinance 579/16.
The FIP must invest solely in technology companies, and this must be specified in the FIP’s bylaws.
For the purposes of the IT Act, “technology companies” means companies incorporated in Brazil that can develop innovative goods, processes, business models or services to which communications and information technologies contribute the highest portion of the added value. Yearly revenues must be capped at BRL 16 million and the technology-based companies cannot pay out more than 25% of profits during the capitalization period.
The FIP’s shares cannot be traded on the secondary market;
The FIP’s management must ensure that its investment activities are restricted to the purposes described in the portfolio

This measure is extremely helpful for the entire innovation ecosystem, especially because it could encourage investments in startups.

Brazilian Government Opens the Domestic Market to Foreign Investments in Fintechs

Posted on 7 de November de 2018 by Anni Varanda

On October 29, 2018, the Brazilian Government issued Decree 9,544/2018, which allows foreign investors to hold up to 100% of shareholder control of either Direct Credit Entities (“Sociedades de Crédito Direto – SDEs”) or Peer-to-Peer Lending Entities (“Sociedades de Empréstimo entre Pessoas – SEP”) registered with the Brazilian Central Bank.

Prior to the issuance of the new decree, foreign entities had to obtain a specific authorization from the Office of the President in order to enter the Brazilian Financial System, with permission being at the discretion of the Federal Government based on the national interest in allowing foreign investments in this industry.

New Private Letter Ruling on Tax Compliance

Posted on 7 de November de 20187 de November de 2018 by Anni Varanda

The Federal Revenue Office has issued Private Letter Ruling 185/2018, which analyzes the tax compliance obligations that taxpayers must comply with in order to offset the withholding income tax levied on service fees, profits, capital gains and other income earned abroad against the corporate income tax levied in Brazil.

According to the tax authorities, the Brazilian taxpayer must prove the withholding income tax credit’s existence with the original payment form or a report issued by the foreign country’s IRS, as long as these documents are certified by the Consulate of the Brazilian Embassy in the source country.

However, these documents do not require certification by the Brazilian Consulate if: (i) the withholding income tax is on dividends paid by a company invested in abroad and the tax is paid through a specific form foreseen in the foreign country’s legislation; or (ii) the withholding income tax is paid in a signatory country of the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents, in which case the payment document will require an apostille.

Finally, according to the tax authorities, the waiver of certification by the Brazilian Consulate is not provided for in the Agreement on Jurisdictional Cooperation and Assistance in Civil, Commercial, Labor and Administrative Matters, signed between Mercosur’s signatory countries including Brazil, Chile and Bolivia.

BRAZILIAN IRS ISSUES NEW PUBLIC CONSULTATION ON CRYPTOCURRENCIES’ PROPOSED REGULATION

Posted on 5 de November de 2018 by Anni Varanda

The Federal Revenue Service of Brazil (RFB) issued a proposal for a new normative instruction that regulates the market for cryptocurrencies, such as bitcoins. The
proposed normative instruction provides for another ancillary obligation (i) for Brazilian resident legal entities qualified as cryptocurrency exchanges and (ii) for Brazilian resident individuals and legal entities that carry out transactions with cryptocurrencies, whether or not those are conducted on cryptocurrency exchange platforms.

According to the new proposed normative instruction, those who conduct transactions with cryptocurrencies must report the name, the nationality, the tax residence, and the current address of the parties to each transaction. Additionally, they must report their Brazilian Individual Taxpayer ID Number (CPF), or their Corporate Taxpayer ID Number (CNPJ), or their Taxpayer Identification Number (NIF) abroad, when applicable, plus any residual information RFB requests in its file.

A more sensible information request in the proposed normative instruction is directed to domestic cryptocurrency exchanges, relating to the balance of currency and cryptocurrencies, as well as to their market value, if available.

The fines established by Article 9(II) include a 3% charge on the total amount of unreported transaction, or those reported with any deficiency or error.

The RFB is accepting comments on the proposed normative instruction from October 31, 2018, until November 19, 2018.

BRAZILIAN TAX REVIEW – OCTOBER 2018

Posted on 31 de October de 201831 de October de 2018 by Anni Varanda

Important New Private Letter Ruling on Transfer Pricing

The Federal Revenue Office issued the Private Letter Ruling 95/2018, which has analyzed the transfer pricing calculation through the Resale Price Method by a company that imports steel bars and cut them into pieces for the resale in the domestic market.

The tax authorities held that this activity is not characterized as “siderurgy”, but as “manufacturing in general”, in a way that the company is eligible to use a lower fixed margin for transfer pricing purposes, which is more advantageous for the taxpayer.

Important to note that this Private Letter Ruling might be applicable to other industries and reduce other TP margins, depending on a case-by-case analysis.

Tax Authorities Revise its Understanding on the Taxation of Admitted Reinsurers’ Business in Brazil

The Federal Revenue Office issued the Private Letter Ruling 91/2018, which, among other aspects, has revised its understanding on the taxation of the admitted reinsurer’s business in Brazil.

According to the tax authorities, if the admitted reinsurer’s representative in Brazil habitually exercises the full authority to conclude contracts on its behalf, the profits earned by the non-resident must be levied by the domestic taxation.

On the other hand, if the representative only provides auxiliary activities to the admitted reinsurer, such as relationship with regulatory bodies or technical and commercial assistance, there would be no attribution of a permanent establishment in Brazil. Thus, only the source taxation would be levied.

This is a change to the Federal Revenue Office’s interpretation. Previously, the Private Letter Rulings 62/2017 had assumed that the admitted reinsurer’s representative always exercises the authority to conclude contracts on its behalf, in a way that the profits earned by the non-resident would be subject to the domestic taxation in any occasion. However, according to the new ruling, such qualification demands a case-by-case analysis.

Brazil-USA Social Security Agreement is Effective as of October 1^st, 2018

Brazil has signed a social security agreement with the United States of America, which became effective as of October 1^st, 2018.

This agreement gives each country’s workers who are resident in the territory of the other country the opportunity to take advantage of the contribution periods in the two countries to obtain the social security benefit.

Important New Definition of “Service Export” for PIS and COFINS Exemption Purposes

According to the Brazilian legislation, services provided by Brazilian companies to non-residents, which generate cash inflow, are exempted from PIS and COFINS.

In this context, the Federal Revenue Office issued the Normative Opinion 1/2018, stating that the PIS and COFINS exemption only applies if the benefit (result) of the service is verified abroad the Brazilian territory. Moreover, such Normative Opinion has analyzed many situations that could be considered as a service export.

Notwithstanding, this requirement (result of the service occurring abroad) has been stated only in the ISS legislation, in a way that it should not be applicable to PIS and COFINS. In this sense, PIS and COFINS exemption must be applicable to any service provided to non-residents, which generate cash inflow, regardless where its result occurs. The exemption is also set forth in the Federal Constitution which makes Normative Opinion 1/2018 challengeable before courts.

Federal Revenue Office’s Controversial Opinion on ICMS Exclusion from the PIS and COFINS Tax Bases

The Federal Revenue Office has issued the Private Letter Ruling 13/2018, analyzing the effects of Supreme Court’s decision on the ICMS exclusion from PIS and COFINS bases (RE 574.706/PR).

According to the tax authorities, the aforementioned decision supposedly held that the ICMS to be excluded is the amount to be paid on a monthly basis, i.e., the net amount of debts and non-cumulative credits. Despite of that, Minister Carmen Lucia, the rapporteur on the case, followed by the majority in the trial, held that the ICMS to be excluded is the amount highlighted in the tax invoice, i.e., before the offset against the non-cumulative credits.

Therefore, the Federal Revenue Office’s opinion has no legal grounds and might be challenged by the taxpayers.

Brazilian Government allows funds to invest in bitcoins and cryptocurrencies abroad

Earlier this year, the CVM – the equivalent to the SEC in Brazil – had issued a regulation to forbid local funds from investing in bitcoins and other cryptocurrencies (http://www.cvm.gov.br/export/sites/cvm/legislacao/oficios-circulares/sin/anexos/oc-sin-0118.pdf).

On September 19, though, the CVM’s office for supervision of relations with institutional investors clarified that this regulation does not prevent indirect investment in bitcoins and other cryptocurrencies, by means of acquisitions of other funds’ shares or derivatives, as long as these operations are allowed in the foreign jurisdictions concerned (http://www.cvm.gov.br/noticias/arquivos/2018/20180919-1.html).

As the CVM’s technical department has pointed out, however, administrators, managers and auditors must keep some precautions in mind when acquiring and maintaining a portfolio that includes bitcoins and other cryptocurrencies.

The CVM highlights the following issues as a concern for market operators: unlawful practices, governance and due diligence, independent auditors and pricing.

As for the possible unlawful practices, the funds must be aware of money laundering, non-equitable and fraudulent practices or price manipulation.

The funds’ management must also carry out its operations with due diligence to avoid the purchase of fraudulent cryptocurrencies.

When it comes to valuation, the CVM recommends that the cryptocurrencies must have liquidity so as to allow the periodic pricing of the funds’ shares.

Brazilian Tax Authorities confirm their understanding on the Taxation of Remittances regarding Marketing/Distribution and End-User Rights Related to Software

The Federal Revenue Office (RFB) has recently issued Private Letter Ruling (PLR) 2,010/2018, stating that the acquisition of marketing and distribution rights for software generates the payment of royalties to the extent that it involves the resale of software licenses. Therefore, the payments for such rights from a Brazilian resident to a non-resident is subject to a 15% withholding income tax.

This PLR confirms the authorities’ position that such remittances must be subject to the taxation as royalties. In other

On the other hand, according to Private Letter Ruling 6,014/2018, also issued recently by the Federal Revenue Office, payments made by Brazilian sources to non-residents for an end-user software license are not subject to such taxation since the software is destined for the exclusive use of the purchaser and there is no intention to sell it to third parties. In this case, the RFB maintains that the license is equivalent to an import of digital goods that is subject to neither the taxes due at regular customs clearance of merchandise nor to the remittances related to the import of services, as long as the software is downloaded by the end-user (a different RFB interpretation applies to software-as-a-service).

Inclusion of Final Beneficiary of Foreign Entities on the Brazilian National Corporate Tax Registration Roll (CNPJ) – deadline 12/31/2018

Posted on 9 de October de 20189 de October de 2018 by Anni Varanda

Brazilian Federal Revenue Bureau (RFB) Normative Instruction No. RFB/IN 1.634 of May 6, 2016, revoked the agency’s previous Normative Instructions (Nos. RFB/IN 1.470/2014, 1.511/2014 and 1.551/2015) and altered the regulations for registration and maintenance on the nation’s Corporate Tax Registration Roll (CNPJ). Now it is mandatory to include information on the final beneficiary of a corporate entity in the CNPJ database for foreign entities that have or file for inscription on such tax registration roll in Brazil.

In turn, the new Normative Instruction requires that information be provided to the RFB on the final beneficiary of overseas structures (foreign investor), which is defined as “the individual that, at the final level, directly or indirectly owns, controls or significantly influences the entity”; or “the individual on behalf of whom a transaction is conducted”. An individual with significant influence is one who “possesses more than 25% (twenty-five per cent) of the foreign entity’s capital, either directly or indirectly; or who predominates in corporate decision-making and has the power to appoint the majority of the foreign entity’s administrators, either directly or indirectly, even without controlling it”.

Identification of the final beneficiary became mandatory as from July 1, 2017, upon inscription of the foreign entities on the CNPJ. By the same token, those that prior to July 1, 2017 were already inscribed on the CNPJ now have the obligation to indicate the final beneficiary upon carrying out any alteration in the CNPJ of the foreign entity;, those that have not carried out any alteration since that time now have a deadline that terminates on December 31, 2018.

It is important to highlight that failure to comply with the obligation to report information on the final beneficiary of foreign entities by the above deadline will entail suspension of the CNPJ and being prevented from carrying out bank transactions here.

Finally, we would alert that the procedure for inclusion of a final beneficiary in the foreign entity’s corporate tax registration here is not a speedy process and depends on analysis of documents on such final beneficiary by the RFB. Such process involves scheduling via password for commencement of a prior administrative process, with transmission of documents (digital dossier) and Basic Input Document (DBE) digitally on the e-CAC portal, with access via Digital Certificate.

Please contact our attorneys for more information on this matter.

Brazilian Government allows funds to invest in bitcoins and cryptocurrencies abroad

Posted on 21 de September de 201821 de September de 2018 by Anni Varanda

Earlier this year, the CVM – the equivalent to the SEC in Brazil – had issued a regulation to forbid local funds from investing in bitcoins and other cryptocurrencies. On September 19, though, the CVM’s office for supervision of relations with institutional investors clarified that this regulation does not prevent indirect investment in bitcoins and other cryptocurrencies, by means of acquisitions of other funds’ shares or derivatives, as long as these operations are allowed in the foreign jurisdictions concerned.

The CVM highlights the following issues as a concern for market operators: unlawful practices, governance and due diligence, independent auditors and pricing. As for the possible unlawful practices, the funds must be aware of money laundering, non-equitable and fraudulent practices or price manipulation. The funds’ management must also carry out its operations with due diligence to avoid the purchase of fraudulent cryptocurrencies.

When it comes to valuation, the CVM recommends that the cryptocurrencies must have liquidity so as to allow the periodic pricing of the funds’ shares.

Please contact our attorneys for more information on this matter.

Brazilian Federal Administrative Tax Court (CARF) rules on capital gains through Closely-end Investment Funds (FIPs)

Posted on 20 de September de 201824 de September de 2018 by Anni Varanda

CARF – which is the highest administrative tax court within the framework of the Brazilian Ministry of Finance – has recently issued two opinions with regards to the deferral of the taxation of capital gains arising out from the sale of share control of a company by means of closely-end investment funds (Fundos de Investimentos em Participações – FIPs).

Under the CVM’s Regulation no# 578/2016, a FIP consists of a closed-end condominium that is intended for the acquisition of shares, securities and any other bonds and notes that are convertible in shares of either publicly or closely-held companies. CVM’s regulation also requires that a FIP must hold a significant influence over the decisions of its invested companies.

FIPs are designed to allow the serial investment in other companies. There are specific types of FIP intended for the investment in startups (seed capital’s FIPs) and other emerging companies.

Due to its legal features, FIPs are also a legal device commonly adopted by family offices for the purposes of investment management and inheritance planning.

In the September/12th session, CARF heard the case of the IRS against Mr. MF[2] . (administrative proceedings nos# 12448.725823/2016-47 and 12448.727473/2016-53). Mr. MF is the co-founder of the wealthiest network of hospitals in Brazil according to Forbes Magazine (Rede).

Mr. MF has appealed the decision of the lower tax court that had disregarded the sale of his shares in the chain of labs controlled by Rede (Labs) to the GF’s group in 2011 for around BRL 1.04 Billion (around 500 million dollars at the time of the events), under an allegation of abusive tax planning.

The IRS challenges the round of operations that ended up with the sale of Labs to FG on grounds of lack of business purpose other than the tax saving. Prior to the FG’s takeover, Labs had merged companies over which Mr. MF held share control. Mr. MF, in turn, reduced his position in Labs, from 100% to 21.89%.

Following to the merger of MF’s companies by Labs, the D. FIP has paid-in a BRL 212 Million capital into Labs in order to take-over 75% of the shares then held by Mr. MF.

Because the taxation of capital gains of the FIP is deferred upon the sale of its quotas by its quota holders, the IRS has claimed that Mr. MF had actually transferred its shares over Labs to the FIP with the only purpose of avoiding the taxation of capital gains in the individual level that would apply otherwise, if Mr. MF had sold his share position in Labs to FG rather than by means of the FIP.

The IRS has disregarded the FIP in order to charge Mr. MF for the Income Tax on the capital gains allegedly arising out from with the sale of Labs to FG plus a 150% fine for malicious behavior and tax fraud.

The IRS also claims that, because the FIP has been shut down right after the FG’s takeover, the FIP would have failed to accomplish its very purpose, that is, to develop other investments.

Mr. MF, though, claimed that the IRS’s assumption is incorrect, since the FIP has played a central role in the operation, for the FIP held a preemptive right to acquire one of the key companies in the transaction.

The 2nd panel of the 2nd chamber of CARF’s second session has granted Mr. MF’s appeal in order to cancel all charges against him. The CARF’s official option has not been published yet.

This case has close connections with another case which was heard by the 1st Judging Panel of the 2nd Chamber of 1st Section on 17th/July/2018.

This last case’s facts date back to 2010, when Hospital SL – a health excellence center in the City of Sao Paulo – was taken over by Rede. The deal mounted to 1 Billion Reais (around 500 million dollars at the time of the events).

The Hospital’s shares had been owned by a holding company (HMV’s Holding). The HMV holding’s shareholders setup a FIP which became one of the shareholders of the holding company.

The HMV holding reduced its capital and transferred the Hospital’s shares it owned to the investment fund (FIP). As an outcome, the FIP acquired the share control over the Hospital. Eventually, the FIP sold the Hospital’s shares to Rede.

If the deal was made directly between the HMV holding and Rede the Income Tax would apply at rate of 34%.

By a vote of 6-2, CARF ruled that the transaction by means of the FIP was legitimate. The majority opinion has found that there was a business purpose for the FIP, because an expert report had shown that there was an economic and technical rationale for its creation, which was justified by expectations of future rentability.

The CARF’s opinion at the case Rede’s case dissented from a precedent issued in 2017, where a similar structure, involving FIP, was put in place by the taxpayer, the largest animal protein provider in the world.

Because there is a divergent opinion issued by CARF in the aforementioned case, the IRS is likely to appeal to the Highest Chamber of CARF. Brazilian Congress is also debating some changes to the rules that govern investment funds taxation, so to avoid that this structure is put in place by taxpayers in order to defer the taxation on capital gains.

A Provisory Measure was issued by the Brazilian President last year in order to introduce changes to the taxation of investment funds (PM no# 806/2017). However, said PM did not pass in the congress by then, and its legal effects have ceased.

Investors with an interest in Brazil should be aware of the upcoming developments concerning the taxation of the FIPs, as they may provide an interesting tool for tax planning.

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[1] Manager of the Tax Litigation department at Gaia, Silva, Gaede Advogados in São Paulo. Master’s degree in Tax and Financial Economic Law from the University of São Paulo, a specialization degree in International Tax Law from the Brazilian Institute for Tax Law (‘IBDT’), and a bachelor’s degree in law from Mackenzie Presbyterian University. Visiting Foreign Lawyer at Parr, Brown, Gee & Loveless (Salt Lake City, UT, USA). Author of articles published in specialized magazines.

[2] While this paper has been based on the information available at the Taxpayers’ Federal Council (CARF) official website (http://idg.carf.fazenda.gov.br/), some names and identifying details have been changed to protect the privacy of individuals.

Brazilian Tax Authorities and their decision on marketing and distribution rights for software

Posted on 20 de September de 201820 de September de 2018 by Anni Varanda

This PLR confirms the authorities’ position that such remittances must be subject to the taxation as royalties. Therefore, as stated in other PLRs, the RFB position is that these remittances are not subject to any other federal tax, since there will be no PIS-Imports and Cofins-Imports (PLR 342/2017) and the CIDE-Royalties tax would only apply (at a 10% rate) in case the transaction entails the transfer of technology (i.e., the source code is given to the purchaser – PLR 441/2017).