Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

September 30, 2021
2021-6010

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

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more