The Brazil – Russia Double Tax Treaty became effective internally in Brazil as of August 1, 2017, date when the Presidential Decree 9,115/2017, enacting it, was published in the Official Gazette.
The treaty, though signed in 2004, was only analyzed by the Brazilian Senate in 2017 and consequently sent for Presidential Decree approval, which led to the above-mentioned Decree.
The main features/specificities of the referred treaty can be seen below:
- Period for permanent establishment (“PE”) characterization regarding a building site, a construction, assembly or installation project or connected supervisory activities (art. 5): if these last for more than 9 months.
- Dividends (art. 10):
- General: 15%;
- If the beneficial owner holds directly at least 20% of the voting power in the company paying the dividends: 10%;
- Please observe that Brazilian domestic legislation currently does not levy WHT on dividend remittance abroad.
- Interest (art. 11):
- Maximum rate: 15% (with certain exemptions, such as payments to governments);
- Brazilian interest on net equity (“INE”) treated as interest, as per the protocol.
- Royalties (art. 12):
- Maximum rate: 15% (payments for the use of – or the right to use – industrial, commercial or scientific equipment);
- Protocol states that fees for technical services should be treated as royalties.
- Professional Services (art. 14):
- This treaty has a professional services article, focused mainly at independent activities of scientific, literary, artistic, educational as well as independent activities of doctors, lawyers, architects, dentists and accountants;
- Their income should be taxed at their State of Residence (observed some exceptions, such as payments made by residents of the other contracting state and/or PEs and activities are rendered in the other contracting state for over 183 days in a 12 month period, with specificities).
- Elimination of Double Taxation (art. 23): Credit method.
- Limitation of benefits (art. 28): Amongst others, does not allow treaty benefits to anyone or any transaction where the treaty is used in an abusive form.
No mention was made to the Brazilian Social Contribution on Net Income – CSLL.
Click here to access the Portuguese version.