After a hesitant ratification process, the double taxation agreement between Switzerland and Brazil has entered into force and will apply from 1 January 2022.
Essentially, the double taxation agreement (DTA) corresponds to the OECD Model Convention.
For dividends, interest, royalties, and technical services, the DTA defines the following withholding tax rates:
Dividends:
Portfolio: 15.00 %
Qualified participations: 10.00 %
Interest:
General: 15.00 %
Under certain circumstances: 10.00 %
Alternatively: 0.00 %
Royalties:
In connection with income from a trademark: 15.00 %
Otherwise: 10.00 %
Technical services:
Remuneration for technical services: 10.00 %
Should Brazil grant another OECD member state lower withholding tax rates than those mentioned above, the lower withholding tax rates will also apply to the agreement with Switzerland ("most favorable nation" clause).
Although the DTA provides for taxation of dividends in the country of origin, in practice Brazil usually does not levy taxes on dividend payments to residents abroad.
Due to the entry into force of the DTA, Brazilian taxes on dividends, interest, royalties and technical services can be credited or reclaimed in Switzerland as of 1 January 2022.
