Brazilian Tax Review – August 2019

Mercosur-EU Free Trade Agreement Moves Forward

After 20 years of negotiations, the European Union and Mercosur have moved forward with the free trade agreement between the two blocs.

The agreement provides for international standards for transparency rules, increases access and competition in government purchases and provides efficiency and cost reductions for imports and exports.

The draft document is still subject to a legal review, translation to all participants' official languages and final signature by the two blocs. Afterwards, the final document will be ready for parliamentary approval in each country-member of the EU and Mercosur.

New Reporting Guidelines for Cryptocurrency Transactions

Normative Ruling 1,888/2019 established that cryptocurrency transactions must be reported to the Brazilian IRS from August 1, 2019. However, reporting guidelines were still to be issued.

These guidelines were issued in the recent Normative Ruling 1,899/2019, which states that all cryptocurrency transactions (acquisition, sale or donation) must be submitted to the tax authorities via the Virtual Service Center (e-CAC) on a monthly basis, if the sum of these transactions exceeds BRL 30,000.00.

The obligation to report must be observed by all the cryptocurrency exchanges domiciled in Brazil and any Brazilian resident that performs transactions with non-residents or without the intermediation of an exchange. Non-compliance with the reporting requirements will result in high fines from the tax authorities.

San Marino is No Longer Blacklisted in Brazil

Normative Ruling 1,896/2019 has removed the Republic of San Marino from the Brazilian tax haven list.

This status modification will affect the determination of the withholding income tax rate on payments to San Marino residents, as well as the application of transfer pricing and thin capitalization rules in transactions between residents of Brazil and San Marino.

Amendment Protocols to the Denmark and Norway DTCs

The Decrees 9,851/2019 and 9,966/2019 have promulgated the amendment protocols to the Denmark and Norway Double Taxation Conventions with Brazil. These amendments modify several topics, such as withholding tax reductions to some specific incomes.

By means of these Decrees, the amendments to the DTCs were internalized in domestic legislation and became effective.

Equipment Rental from Israel is Subject to a 10% Withholding Income Tax in Brazil

Private Letter Ruling 216/2019 states that payments from...