Withholding income tax on foreign educational, scientific or cultural services

Written by | Intellectual Property, Tax and Customs

On 21 November 2017, the Brazilian Federal Revenue Department (Receita Federal do Brasil, “RFB”) published Private Ruling 519/2017 which addresses the charging of withholding income tax on educational, scientific or cultural services provided by foreign companies.

Specifically, the Ruling states that the availability of electronic content on the internet, via paid subscription, will be taxed as a service. However, based on a specific legislative exemption the RFB found that no withholding income tax would be payable if all of the following applies:

  • the payment is made by a Federal public institution;
  • the institution provides training to Brazilian teachers;
  • the services supplied to the institution are for the “scientific and technological development” of Brazil; and
  • the payment is made for online access to periodicals and databases relating to the institution’s activities.

Further, the RFB ruled that the constitutional immunity applicable to books, newspapers and periodicals does not apply to withholding income tax is a tax charged on the business rather than on the things supplied or imported (i.e. books and related materials).  Further information on this topic can be found here.

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Last modified: March 20, 2019