The Brazilian internal revenue and the Switzerland Government signed on May 3rd, 2018 an agreement to avoid the double taxation and refrain tax evasion.

The agreement should be ratified by the Brazilian Congress and later regulated by the President’s decree. The Swiss Parliament should also approve the text. Each government defined boundaries and standardized tax competences to eliminate or minimize the tax charging on the income tax more than once.

The agreement will consolidate the commercial relations between the two countries and stimulate the productive investment.

According to the Brazilian tax authorities, Swiss companies have invested US$ 22 billion in Brazil in 2016, which guarantees the sixth position among the countries that allocate productive funds to the Brazilian economy.

The agreement is according to the guidelines of the Organization for Economic Cooperation and Development (OECD) and with the project about tax Base Erosion and Profit Shifting (Beps) protocol considering international recommendations to avoid tax planning whenever a company finds legal gaps to pay fewer taxes.

The agreement will prevent not only the double taxation [repeated tax collection], but also the double no taxation [when the taxpayer does not pay tax in any country].

This is the third tax agreement signed between Brazil and Switzerland in recent years.

In 2015, both Governments signed a decree to exchange tax information without the necessity of court orders, aiming to improve investigations related to white-collar crimes. The authority of each country can promptly ask for information on the administrative level once detected any suspicious action. It was approved by the Chamber of Deputies, but the text still needs to be voted by the Senate.

In 2016, the Internal Revenue and the Swiss tax authority signed a joint statement for exchanging automatic information about the assets, financial transactions and tax payment of Brazilians with funds in other countries. The agreement follows the recommendations of G20 (Group of 20 largest economies of the planet) and the OECD.

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