Brazil: Brazilian Tax Review – August 2019

Mercosur-EU Free Trade Agreement Moves Forward

After 20 years of negotiations, the European Union and Mercosur have moved forward with the free trade agreement between the two blocs.

The agreement provides for international standards for transparency rules, increases access and competition in government purchases and provides efficiency and cost reductions for imports and exports.

The draft document is still subject to a legal review, translation to all participants' official languages and final signature by the two blocs. Afterwards, the final document will be ready for parliamentary approval in each country-member of the EU and Mercosur.

New Reporting Guidelines for Cryptocurrency Transactions

Normative Ruling 1,888/2019 established that cryptocurrency transactions must be reported to the Brazilian IRS from August 1, 2019. However, reporting guidelines were still to be issued.

These guidelines were issued in the recent Normative Ruling 1,899/2019, which states that all cryptocurrency transactions (acquisition, sale or donation) must be submitted to the tax authorities via the Virtual Service Center (e-CAC) on a monthly basis, if the sum of these transactions exceeds BRL 30,000.00.

The obligation to report must be observed by all the cryptocurrency exchanges domiciled in Brazil and any Brazilian resident that performs transactions with non-residents or without the intermediation of an exchange. Non-compliance with the reporting requirements will result in high fines from the tax authorities.

San Marino is No Longer Blacklisted in Brazil

Normative Ruling 1,896/2019 has removed the Republic of San Marino from the Brazilian tax haven list.

This status modification will affect the determination of the withholding income tax rate on payments to San Marino residents, as well as the application of transfer pricing and thin capitalization rules in transactions between residents of Brazil and San Marino.

Amendment Protocols to the Denmark and Norway DTCs

The Decrees 9,851/2019 and 9,966/2019 have promulgated the amendment protocols to the Denmark and Norway Double Taxation Conventions with Brazil. These amendments modify several topics, such as withholding tax reductions to some specific incomes.

By means of these Decrees, the amendments to the DTCs were internalized in domestic legislation and became effective.

Equipment Rental from Israel is Subject to a 10% Withholding Income Tax in Brazil

Private Letter Ruling 216/2019 states that payments from Brazilian residents to Israeli residents, derived from the use of industrial equipment, are subject to a 10% withholding income tax in Brazil, rather than 15%.

The tax authorities stated that the rental fees must be classified as royalties under the Brazil-Israel DTC, applying a reduced withholding tax rate.

The reduced rate applies only when the Israeli beneficiary does not conduct the rental activities through a permanent establishment in Brazil.

Technical Services Rendered by Finnish Providers are not Subject to Withholding Income Tax

Private Letter Ruling 6,017/2019 states that remittances to residents of Finland for technical services are exempted from withholding income tax, due to article 7 of the Brazil-Finland Double Taxation Convention.

The exemption applies only when the Finnish beneficiary does not perform the activities through a permanent establishment in Brazil.

Debt Forgiveness from Non-Residents Is Subject to the Withholding Income Tax, Claims the IRS

Private Letter Ruling 210/2019 states that debt forgiveness from non-residents to Brazilian companies, related to interest derived from loans, is subject to a 15% withholding income tax.

In the specific case, the Brazilian company had accrued the interest expenses in its financial statements and reverted them to accumulated losses as a result of the debit forgiveness.

The tax authorities took the position that the triggering event for the withholding income tax is not only the income's remittance or payment, but also the "use" of the income for other purposes.

This private letter ruling is very controversial and might be challenged by taxpayers in court.

IOF Exemption on Exports Applies Even if the Revenue is not Repatriated Immediately

Private Letter Ruling 231/2019 has changed the IRS's position on the IOF exemption for export revenues, so as to observe Opinion 83/2019, issued by the Attorney General's Office.

According to that opinion and the new private letter ruling, the IOF exemption applies to exports, even if the corresponding revenue is maintained in a foreign bank account, instead of being immediately transferred to Brazil. However, in order to take advantage of the exemption, the revenue must be repatriated within 750 days.

This new private letter ruling should put an end to court cases between taxpayers and tax authorities on this matter.

Administrative Tax Tribunal Has Canceled Customs Fine Applied to an Exporter for Hiding the Actual Acquirer

Brazilian law states that the use of a conduit person to hide the actual buyer in import or export transactions is a customs infraction, which is subject to the penalty of seizure of the merchandise.

In this context, exports conducted through foreign trading companies that belong to the same economic group are usually questioned by customs authorities, which claim that this structure is used to hide the actual acquirers.

In a recent decision, the Administrative Tax Tribunal canceled the customs fine imposed on a Brazilian exporter since the company was able to identify the final acquirers and prove the business purpose on the structure.

This decision is certainly a good precedent for Brazilian exporters and will influence future decisions of the Administrative Tax Tribunal on the same matter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Gaia Silva Gaede Advogados
Gaia Silva Gaede Advogados
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Gaia Silva Gaede Advogados
Gaia Silva Gaede Advogados
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions