Brazil and Iceland have signed a new tax treaty on 14 October 2024.
The agreement will introduce several key provisions, including a principal purpose test and a limitation on benefits clause. It also addresses fiscally transparent entities, ensuring income derived through such entities is considered resident income for taxation purposes.
The treaty sets withholding tax rates for various payments: 10% on dividends for companies with a 15% shareholding for at least 365 days, 15% on interest, 10% on royalties, and 10% on fees for technical services, including managerial, technical, or consultancy services.
This is the first treaty between the two nations and will take effect once the ratification instruments are exchanged.
