[ESTABLISHING A BUSINESS ENTITY IN BRAZIL] 73
haven. Non-technical services are also subject to a 25% rate. Additional taxes may apply depending on the nature of the remittance. If Brazil has a double taxation treaty with the beneficiary's country of residence, these rates may be reduced or eliminated, and the IRRF paid in Brazil may be credited abroad, subject to the provisions of the applicable treaty and the beneficiary country’s domestic law. (h) Regarding the import of technical services, administrative assistance, and similar services, the Contribution for the Intervention in the Economic Domain (CIDE) is also levied at a rate of 10% on amounts remitted abroad. This tax also applies to remittances abroad arising from technology transfer agreements signed with individuals or entities residing or domiciled abroad, as well as to royalties of any kind paid to non-residents. (i) Dividends are tax free in Brazil, regardless of the beneficiary’s domicile. However, the National Congress is currently examining Bill No. 1087/2025, which proposes a 10% tax on dividends remitted abroad 12 . (j) The Tax on Financial Operations (IOF) applies to financial transactions, including credit, securities, and foreign exchange (FX). IOF-FX is generally levied at 3.5% on outflows and 0.38%
on inflows, except in cases defined by executive decree. For instance, dividend remittances and the repatriation of equity capital to foreign investors are exempt from IOF-FX.
(k) The most relevant labor-related taxes are Social Security Contribution of 20% on payroll and Employment Security Fund – FGTS of 8%, also on payroll. 6.2. Tax Regimes: There are two basic regimes for calculation and payment of the Corporate Income Tax (IRPJ) and the Social Contribution on Net Profit (CSLL), namely the “Real Profit Regime” and the “Deemed Profit Regime”. (a) Real Profit Regime. Companies with total gross revenues greater than BRL 78,000,000.00 per year must assess income tax according to the Real Profit Regime, which is based on quarterly or annual balance sheets. They may not opt for the Deemed Profit Regime (a simplified system of taxation based on a statutory percentage of gross revenues). Other companies subject to the Real Profit Regime of taxation, irrespective of the revenue level, are the following: ( i ) involved in financial activities (banks, leasing companies and other financial institutions) or factoring; ( ii ) that have earned profits or capital gains arising from foreign interest exceeds the nominal IRPJ and CSLL tax rates, the foreign beneficiary will be granted a credit calculated on the amount of profits and dividends paid, credited, delivered, employed, or remitted that have been taxed. These provisions may be amended if the bill is converted into law.
since all services are in certain level “technical”, the 25% rate is seldom applicable.
12 Bill 1087/2025 is currently pending a vote by the National Congress. The proposal establishes a 10% tax rate on dividends paid abroad, regardless of the amount remitted, and, if it is verified that the effective tax rate
ILN Corporate Group – Establishing a Business Entity Series
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