On 29 November 2022, Brazil and the UK signed a long-awaited Double Taxation Agreement (DTA). While the DTA will not enter into force until completion of the relevant legislative procedures required by Brazilian and UK law, which in Brazil requires the DTA to be approved by Congress and signed by the President, its implications are already relevant to multinationals which are, or are considering, operating in both jurisdictions. This is one of the more favorable treaties that Brazil has entered into.
When in effect, the DTA will establish the following withholding tax rates for source-country taxation on various types of income:
Dividends (Article 10):
- 10% of the gross amount of dividends paid to a company (the beneficial owner) that holds directly at least 10% of the capital of the payer company throughout a 365-day period that includes the date of the payment of the dividends.
- In all other cases, the rate will be 15%.
Currently, neither the UK nor Brazil impose a withholding tax on dividends, but…
