Last month, Decree No. 12,406/2025 was published promulgating a new Double Tax Treaty (“DTT”) between Brazil and Norway. The new DTT, which replaces the provisions of the original treaty (enacted in 1981 and amended in 2019), sets forth unprecedented provisions.
Following the guidelines of the Base Erosion and Profit Shifting Project (“BEPS”) of the Organization for Economic Cooperation and Development (“OECD”), the DTT is the result of Brazil’s commitment to greater cooperation among international tax administrations and, in addition to combating tax avoidance and double taxation, seeks to bring Brazilian rules up to modern standards.
We have summarized below the main provisions of the new DTT.
| Treaty | |
| Dividends | WHT rates are limited to 10% if the beneficiary holds at least 25% of the paying company’s capital over a 365-day period, or 15% in other cases. |
| Interest | Interest shall be taxed in both Contracting States. However, WHT rates are limited to 10%, in the case of bank loans of at least 5 years granted to finance the purchase of equipment or investment projects, or 15%, in other cases.
Note: interest on net equity (the so-called Juros sobre Capital Próprio) is comprised within the interest clause.
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| Royalties | Royalties shall be taxed in both Contracting States. WHT rates are limited to 15% in case of industrial or commercial trademarks, or 10% in other cases. |
| Technical Services | Remuneration for technical services, broadly defined as those of a ‘managerial, technical, or consulting nature’, shall be taxed in both Contracting States, but WHT rates are capped at 10%. In the former version of the treaty, technical services were treated as royalties. |
| Elimination of double taxation | Deduction of taxes paid in the other Contracting State. |
| Other keypoints
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Most-favored-nation Clause: After the signing date of the DTT, if Brazil agrees, via a convention, to rates that are lower than the ones provided for dividends, interest, royalties or fees for technical services, with any other OECD member (excluding any state in Latin America), these lower rates will automatically apply to the Brazil-Norway DTT.
Principal Purpose Test: The tax benefits provided for in the DTT shall not be granted “if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction”.
Thincap/CFC: the DTT does not cover domestic rules aimed at countering tax evasion and avoidance, including thin capitalization rules and anti-deferral through controlled foreign corporation rules (CFC legislation) or any similar legislation.
Offshore: Offshore activities, considered to be undertakings ‘in connection with the exploration or exploitation of the seabed or subsoil or their natural resources‘, are specifically addressed by the DTT. |
