If you are from a Spanish-speaking or European country and are considering investing in Brazil, there is a good chance that a double taxation treaty exists between your country and Brazil. And that can make a significant difference to your return on investment.
What is double taxation?
When a foreign executive or investor obtains fiscal residence in Brazil, they become subject to Brazilian income tax — but may also continue to be taxed in their home country. Without a treaty, the same income is taxed twice.
Double Taxation Avoidance Agreements (DTAAs) allow taxes paid in one country to be offset against tax obligations in the other, eliminating this penalization.
Which countries has Brazil signed agreements with?
Brazil has tax treaties in force with the following countries: Argentina, Austria, Belgium, Canada, Chile, China, South Korea, Denmark, Ecuador, Spain, Philippines, Finland, France, Netherlands, Hungary, India, Italy, Japan, Luxembourg, Norway, Portugal, Czech Republic, Slovakia, South Africa, and Sweden.
How does it work in practice?
Taking Spain as an example — a country with many entrepreneurs establishing operations in Brazil: a Spanish executive who obtains fiscal residence in Brazil pays income tax here, and upon returning to Spain, the taxes already paid in Brazil are offset against their Spanish tax obligations. No income is taxed twice.
What about countries without a treaty?
Profit remittances to shareholders residing in tax havens are subject to 25% withholding. For other countries without a treaty, the situation must be analyzed on a case-by-case basis — prior tax planning becomes even more critical.
This concludes our ‘Doing Business in Brazil’ LinkedIn series. I hope it has been useful for those considering establishing operations here. I am available for questions and for a personalized conversation about your project.
📩 Ready to establish your company in Brazil with full legal security? Contact Sara Sanchez Advogados — specialists in foreign companies entering Brazil.
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