The Dance of the Lions




Analyses of International Tax Treaties


(4.1) Double Taxation Treaty (DTT) Brazil-Belgium


(4.1.g) Business Profits


125. When a Brazilian company operates in the Belgian market, or vice-versa, there are two phenomenons that we need to understand to defines how the taxation will be: the operability in a market and the consequent profits resulted from this operability; and the State related to this market can charge, but in the measure of the extracted quantum of this specific market, observing that such quantum will enter in the sphere of taxation of the State where is the headquarter of the company (for the purpose of measure the profit and mechanism to avoid the double taxation) by criteria of similarity, already considering issues of transfer pricing, as we can understand to from the Article 7, 2, of the Convention among Brazil and Belgium:

When a company of a Contracting State operates in the other Contracting State, trough a permanent establishment in this last, will be imputed to each Contracting State, in relation to this permanent establishment, the profits that the business would obtain if constituted a distinct and separated company which ones renders identical or similar activities, in identical or similar conditions, and would transact with total independence with the company of which is a permanent establishment

126. Then, the basilar criterion is to taxing income in a world-wide way, considering the place of origin of the earnings, always relating that with a resident, and, therefore, a taxable person.


* Lecture on the Dance of Lions (2013)


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