On 30 December 2022, the INPI’s minutes of the meeting held on 28 December 2022 were published. The minutes provide that there can be licensing of unregistered proprietary information (“know how” and “technology”) and “any other IP assets”.
Additionally, the INPI concluded that royalties can be paid for licensing the use of unregistered intellectual property rights. These includes rights over filed but not yet registered trademarks (which was already accepted by the INPI), patents and industrial designs, as well as other intellectual property rights.
The new position allows for registration of these licensing agreements with the INPI, which is an essential requirement for the purposes of tax deductibility of the royalties paid by the Brazilian licensees.
While there are still some restrictions on the deductibility of royalties, these are far from unusual (and, to avoid any doubt, it does not apply to those companies that choose to be taxed under the deemed profit method).
For changing its longstanding position the INPI relied on the principles implemented by the Economic Freedom Law that came into force in 2019.
Foreign licensors have been waiting for these reforms for many years. This is very positive news and yet another step taken by Brazil towards increasing trade with foreign countries and becoming an OECD member.
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Brazil Brazilian Central Bank Deductibility Double Tax Agreements Importing OECD Royalties Tax Transparency
Last modified: January 6, 2023