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V5291-16 14 December 2016 · SG de Fiscalidad Internacional Criterion in force
IRNR · compraventa internacional de mercancías

No retention on Brazilian goods purchases; 10% retention on fees under most favoured nation clause

A Spanish company asks whether retention applies to purchases of goods and services in Brazil and payments to clubs and agents. The DGT confirms that purchases of goods do not trigger taxation in Spain and that fee payments are capped at 10% under the most favoured nation clause.

The question raised

Question posed: Whether it is appropriate to apply withholding on payments made for the purchase of goods and services from Brazilian companies, and on payments made to the Brazilian Club and to the company's agents in the distribution of profits.

The DGT's ruling

International purchases of goods are not considered income obtained in Spanish territory, and therefore are not subject to withholding. Services provided by Brazilian companies are taxed only in Brazil if they do not have a permanent establishment in Spain. Payments for the exploitation of trademarks or image rights are considered royalties and, according to the Double Taxation Convention with Brazil and the most-favored-nation clause, the applicable withholding rate is 10%.

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