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Legal Update

Brazil: Normative Ruling No. 1,658/2016: Update of the List of Countries or Premises with Favorable Taxation and Privileged Tax Regimes

22 September 2016
Tauil & Chequer Legal Update

On September 14, 2016, Normative Ruling No. 1,658/2016 was published.  The Ruling included an updated list of countries and premises with favorable taxation and privileged tax regimes related to Normative Instruction No. 1,037/2010.

Normative Ruling No. 1,658/2016 included a list of countries and premises with favorable taxation. The list included (i) Curacao, (ii) Ireland and (iii) Saint-Martin Island; and excluded (i) Netherlands Antilles and (ii) St. Kitts and Nevis. Additionally, companies incorporated in the Austrian Republic as holding companies were included in the list of privileged tax regimes.

The aforementioned Normative Ruling also defines a holding as an entity that performs economic activities for the purposes of recognition of privileged tax regimes and possesses operational capacity corresponding to its business activities in the country where it is located, which can be proven by (i) the existence of a sufficient quantity of qualified employees and (ii) physical installations adequate for the performance of management for the purpose of decision-making related to its activities in order to earn incomes derived from assets owned or from the distribution of profits and capital gain in the management of corporate equities.

Section 3 of the Normative Ruling established that the new rules would enter into force on the date in which the Normative Ruling was published, but would only become effective after October 1, 2016.

Observations in this update about Brazilian law are by Tauil & Chequer Advogados and are not intended to provide legal advice. Any entity considering the possibility of a transaction must seek advice tailored to its particular circumstances.

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