Brazil: New tax regulation may impact dividend withholding tax


On 12 November 2013, the Brazilian Government published Provisional Measure 627/12 (MP 627/13) in the Official Gazette.

This new Provisional Measure impacts the Transitional Tax Regime (RTT) through Normative Instruction 1397 (NI 1397/13) and may have an impact on dividend distributions.

According to NI 1397/13, any excess dividends distributed should be subject to withholding tax as follows:

  • 15% when paid to foreign beneficiaries not domiciled in tax-haven jurisdictions;
  • 25% when paid to foreign beneficiaries domiciled in tax-haven jurisdictions.

We continue to monitor the Brazilian market and will provide further clarifications of the new tax regulation as they become available.

This Taxflash is intended to provide customers with general information gathered from different sources that are generally believed to be reliable. Clearstream Banking S.A. does not guarantee the accuracy or completeness of the information and does not undertake to keep it up to date. Use of the information made available in this Taxflash is at the customer’s own risk and Clearstream Banking S.A., its subsidiaries and affiliates expressly disclaim any liability for any errors or omissions reflected herein. The information in this Taxflash does not constitute legal or tax advice.