As of December 15, 20201, the Brazilian Superior Court of Justice (STJ) decided that it is necessary to verify on a case-by-case basis whether services provided by foreign persons are to be considered independent professional services2 or services, with embedded royalties3, for Double Tax Treaty applicability (in what concerns OECD Model DTTs).

Whereas before such remittances abroad would be automatically treated as foreign corporate profits (article 7 of OECD Model DTTs), and therefore be exempt from Withholding Income Taxation (IRRF)4; under this new case law, Brazilian tax Authorities may request that taxpayers demonstrate/prove that no other possible treatment can be attributed to these remittances.

Hence, extra care is recommended as to guarantee that payments, for services provided to Brazil, are actually treated as foreign corporate profits by Brazilian Tax Authorities, and not as royalties or other taxable payments.



1. When the 2nd Panel of the STJ granted Special Appeal No. 1,759,081/SP, filed by the National Treasury, which deals with the collection of IRRF on remittances abroad for payment of services and technical assistance.
2. Art. 14 of the OECD Model Convention.
3. Art. 12 of the OECD Model Convention.
4. As a result of the application of Brazilian signed DTTs.