(4.1.j) Dividends
§129. In Article 10 of the Convention Brazil-Belgium, it is possible verify, e.g., that the dividends payed to a Brazilian company (that is under Brazilian jurisdiction and with headquarter in Brazil) to a Belgian partner, resident in Belgium, will be taxed in Belgian jurisdiciton, or, if also taxed in Brazil, will be at a maximum of:
“a) 10% of the gross amount of the dividends if the effective beneficiary is a company that has directly at least 10% of the quota/share capital of who pays the dividends; b) 15% of the gross amount of the dividends, in all other cases”
§130. Currently, in May 2019, Brazilian State do not taxing dividends by force of the Law 9.249/1995, Article 10:
“The net profits or dividends calculated are based in the measured results from the January 1996, payed or credited by the legal entities taxed with base on real calculation of the income (net profit), or presumed base’s calculation (gross profit), or arbitrated base’s calculation (administrative decision of the State), will not be subject to the incidence of the income tax at the source, nor will be used in the calculation basis of the income tax of the beneficiary, natural or legal person, domiciled in the country or abroad”
§131. In other words, Brazil would charge the Tax on Income of Legal Entity, but not on the dividends; and the Belgium will charge tax over the income of the Belgian partner, considering yet the terms of the Article 17, of the Belgian Income Tax Code 1992 (Code des impôts sur les revenus, ‘CIR 92’):
“Income from capital and movable property is all proceeds of movable property engaged in any way whatsoever, namely: dividends”
observing that, if exist some conditions established by law, then it is possible, in some years, like 2018, exist even a 100% dividends received deduction. Other important point is to considers the interaction in the tax environment of the new Belgian Companies and Associations Code, enacted by the Act of 23 March 2019, that changes in the corporate legal framework, changing concepts like resident and foreign companies.
§132. An observing that demonstrates progress in the bilateral relation among Brazil and Belgium, aiming promote it, is related to the amendment that changes the Article 10, 5, of the Convention, which one originally, in 1.973, declares:
“When a resident legal entity of Belgium has a permanent establishment in Brazil, this permanent establishment would be subject to a withholding tax in accordance to the Brazilian legislation, but this tax would not exceed 15% of the amount of the net profits of the permanent establishment, determined after the payment of the tax on legal entities related to these net profits”
and, after 2008, the norm has passed to declares a decrease of more than 30%:
“When a legal entity resident in Belgium has a permanent establishment in Brazil, this permanent establishment would be subject to a withholding tax in compliance with the Brazilian legislation, but this taxes can not exceed 10% of the amount of net profit of the permanent establishment, determined after the payment of the tax on the legal entities related to these net profits”
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