Tax Treaty Case Law around the Globe 2024

21.1. Introduction

This chapter examines the Motorola Case as ruled by the Superior Court of Justice. The case dealt with the application of article 12 (“Royalties”) to technical services rendered with no transfer of technology. The treaties analysed were concluded between Brazil and Germany, China, and Argentina, each containing specific provisions on technical services and technical assistance in their respective protocols. This case is important for two reasons.

First, prior to this case, the taxation of technical services and technical assistance with no transfer of technology had not been explicitly addressed. Recent decisions by the Superior Court of Justice have focused solely on the qualification of technical services under article 7 (“Business Profits”), 21 (“Other Income”) or 14 (“Independent Professional Services”).

Second, this case introduces a novel perspective by examining whether different protocols’ wordings can impact the taxation of technical services without technology transfer. It is acknowledged that Brazilian tax policy incorporates provisions for taxing technical services and assistance within its protocols. Since the concept of royalties, in the context of tec...