23 August 2016 Spanish tax authorities characterize Brazilian juros as "interest" for treaty purposes, grant tax sparing as opposed to full exemption The Spanish Tax Authorities (STA) issued two binding tax rulings on June 27, concluding that Brazilian-sourced Interest on Net Equity payments (juros sobre o capital próprio or JsCP) should be characterized as interest pursuant to the Brazil-Spain Double Tax Treaty (the Treaty), regardless of its categorization as dividends under Spanish domestic tax law (Domestic law). As a result of this interpretation, JsCP would not qualify for any of the full exemption mechanisms to avoid international double taxation provided for under the Treaty or Domestic law. A Tax Alert prepared by EY's Global Tax Desk Network, and attached below, provides additional details. Document ID: 2016-1437 |
