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September 30, 2021

Brazilian Tax Authority rules withholding tax does not apply to cross-border insurance premiums paid by Brazilian customers to a Norwegian insurance company

Brazilian withholding tax does not apply to premium payments made by a Brazilian resident company to a Norwegian insurance company without a permanent establishment. This ruling is good news for foreign insurance companies that receive premium payments from Brazilian resident customers as those payments may be exempt from withholding tax where a double-tax treaty is available.

In Private Letter Ruling (PLR) No. 138 of 20 September 2021, the Brazilian Tax Authority provided welcome guidance as it ruled that, under the rules of the Brazil-Norway double tax treaty, withholding tax does not apply to insurance premiums paid to a Norwegian insurance company without a permanent establishment in Brazil.

A Brazilian resident vessel charter company paid professional liability insurance premiums to an insurance company that was resident in Norway and had no permanent establishment in Brazil. The Brazilian company requested this ruling to determine whether it had to withhold tax on the premium payments.

In analyzing the relevant facts and circumstances, the Brazilian Tax Authority noted that professional liability insurance is characterized as the provision of a service and that such service is of a non-technical nature. The Brazilian Tax Authority also pointed out that Article 12 (Royalties) of the Brazil-Norway double tax treaty does not apply to the premium payments because of the non-technical nature of the service. In addition, it determined that the treaty has no other specific articles that deal with premium payments for professional liability insurance. Therefore, the Brazilian Tax Authority concluded that Articles 5 (Permanent establishment) and 7 (Business profits) of the double tax treaty applies to the case at hand.

Applying both Articles 5 and 7 of the Brazil-Norway double tax treaty, the Brazilian Tax Authority ruled that Brazilian withholding tax does not apply to the professional liability insurance premiums paid by the Brazilian resident vessel charter company to the Norwegian insurance company without a permanent establishment in Brazil.


For additional information with respect to this Alert, please contact the following:

EY Assessoria Empresarial Ltda, São Paulo

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific


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