Tax Treaty Case Law around the Globe 2022
1. Aufl. 2023
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19.1. Introduction
This contribution discusses a case (hereinafter “WEG Case”) involving the taxation of payments made by WEG Equipamentos Elétricos S/A., WEG Tintas Ltda. and WEG Drives & Controls - Automação Ltda. (hereinafter referred to as the “taxpayers”) to companies located abroad in compensation for services provided with no transfer of technology. The taxpayers challenged the tax assessment before Brazilian judicial courts.
The case involves payments made to companies domiciled in countries with which Brazil has (or once had, as in the case of Germany) double taxation conventions in force, namely: Argentina, Austria, Belgium, Canada, Chile, China, Czech Republic, Denmark, Finland, France, Germany, Hungary, India, Israel, Italy, Japan, Luxembourg, Mexico, Netherlands, Norway, Peru, Philippines, Portugal, Spain, Slovakia, South Africa, Sweden, Trinidad and Tobago, Türkiye, Ukraine and Venezuela.
The scope of this chapter is to discuss how to qualify, under Brazilian tax treaties, payments made to non-resident service providers as a remuneration for services provided with no transfer of technology. As one will see, the discussion is centred on the scope of articles 7, 12 and 14 ...