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Law Approving The Additional Convention Signed In Brasilia On 20 November 2002 Amending The Convention Between The Kingdom Of Belgium And The Federal Republic Of The Brazil For The Avoidance Of Double Taxation And Set Some Other

Original Language Title: Loi portant assentiment à la Convention additionnelle, signée à Brasilia le 20 novembre 2002, modifiant la Convention entre le Royaume de Belgique et la République fédérative du Brésil en vue d'éviter les doubles impositions et de régler certaines autres

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17 DECEMBER 2004. - An Act to approve the Additional Convention, signed in Brasilia on 20 November 2002, amending the Convention between the Kingdom of Belgium and the Federal Republic of Brazil with a view to avoiding double taxation and resolving certain other income tax issues, and the Final Protocol, signed in Brasilia on 23 June 1972 (1)(2)



ALBERT II, King of the Belgians,
To all, present and to come, Hi.
The Chambers adopted and We sanction the following:
Article 1er. This Act regulates a matter referred to in Article 77 of the Constitution.
Art. 2. The Additional Convention, signed in Brasilia on 20 November 2002, amending the Convention between the Kingdom of Belgium and the Federal Republic of Brazil with a view to avoiding double taxation and resolving certain other income tax issues, and the Final Protocol, signed in Brasilia on 23 June 1972, will come out its full and full effect.
Promulgate this law, order that it be clothed with the seal of the State and published by the Belgian Monitor.
Given in Brussels on 17 December 2004.
ALBERT
By the King:
Minister of Finance,
D. REYNDERS
Minister of Foreign Affairs,
K. DE GUCHT
Seal of the state seal:
The Minister of Justice,
Ms. L. ONKELINX
____
Note
(1) Session 2004-2005.
Senate
Documents. - Bill tabled on 11 June 2004, No. 3-741/1.
Annales parliamentarians. - Discussion and voting. Session of July 15, 2004.
House of Representatives
Documents. - Project transmitted by the Senate, No. 51-1295/1. - Text adopted in plenary and subject to Royal Assent, No. 51-1295/2.
Annales parliamentarians. - Discussion and voting. Session of July 25, 2004.
(2) This Convention comes into force on 23 October 2007.

Additional Convention, amending the Convention between the Kingdom of Belgium and the Federal Republic of Brazil, with a view to avoiding double taxation and resolving some other income tax issues, and the Final Protocol, signed in Brasilia on 23 June 1972
His Majesty the King of the Belgians,
and
President of the Federal Republic of Brazil
Desirous of concluding an additional Convention amending the Convention between the Kingdom of Belgium and the Federal Republic of Brazil, with a view to avoiding double taxation and resolving some other income tax issues and the Final Protocol, signed in Brasilia on 23 June 1972 (hereinafter referred to as "the Convention" and "the Final Protocol"),
Appointed to this effect for their Plenipotentiaries, namely:
For the Government of His Majesty the King of the Belgians, Mr. Jean-Michel Veranneman de Watervliet, Ambassador Extraordinary & Plenipotentiary of the Kingdom of Belgium to Brazil,
For the Government of the Federal Republic of Brazil, Mr. Celso Lafer, Minister of External Relations of the Federal Republic of Brazil;
The following provisions were agreed upon after having exchanged their full powers, which were recognized in due form:
Article Ier
The provisions of Article 2 of the Convention shall be deleted and replaced by the following provisions:
“1. This Convention applies to income taxes collected on behalf of a Contracting State, irrespective of the system of collection.
2. The current taxes to which the Convention applies are:
(a) for Belgium:
1 the tax of natural persons;
2 corporate tax;
3 the tax of legal persons;
4 non-resident tax;
5 the complementary contribution of crisis,
including pre-payments, additional cents to such taxes and pre-payments, and additional taxes to the tax of natural persons
(hereinafter referred to as "Belgian tax");
(b) for Brazil: the federal tax on income and profits of any kind
(hereinafter referred to as "Brazilian tax").
3. The Convention also applies to taxes of an identical or similar nature that would be established after the date of signature of the Convention and that would be in addition to or replace existing taxes. The competent authorities of the Contracting States shall communicate the significant changes to their respective tax laws. »
Article II
Article 4, paragraph 1erthe Convention shall be deleted and replaced by the following provisions:
“1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the law of that State, is subject to tax in that State, because of his domicile, residence, management seat or any other similar criterion. »
Article III
The provisions of Article 10 of the Convention shall be deleted and replaced by the following provisions:
“1. Dividends paid by a resident corporation of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the law of that State, but the tax so charged cannot exceed:
(a) 10 p.c. of the gross amount of the dividends if the beneficial owner is a corporation that holds at least 10 p.c. of the capital of the corporation that pays the dividends;
(b) 15 p.c. of the gross amount of dividends in all other cases.
The provisions of this subsection do not limit the taxation of the corporation on profits that are used for the payment of dividends.
3. The term "dividends" used in this article refers to income from shares, shares or good of enjoyment, shares of mine, share of founder or other share of beneficiaries with the exception of receivables. This term also refers to income, which is itself allocated in the form of interest, subject to the same tax regime as income from shares under the law of the State whose distribution society is a resident.
4. The provisions of §§ 1er and 2 shall not apply where the beneficiary of the dividends, a resident of a Contracting State, has in the other Contracting State whose dividend-paying corporation is a resident, a permanent establishment to which the dividend-generating interest is effectively connected. In this case, the provisions of Article 7 shall apply.
5. Where a Belgian resident corporation has a permanent establishment in Brazil, the establishment may be subject to a tax withheld at the source in accordance with Brazilian legislation, but this tax may not exceed 10 p.c. of the amount of the profit of the permanent establishment, determined after the payment of the tax on the companies related to the profit. »
Article IV
Section 12, paragraph 2, (b) is deleted and replaced by the following provision:
"(b) 20 p.c. of the gross amount of royalties paid for the use of a trademark or trade mark; "
Article V
The provisions of Article 16 of the Convention shall be deleted and replaced by the following provisions:
“1. The fortieth, attendance and other similar remuneration that a resident of a Contracting State receives as a member of the board of directors or of a similar body of a corporation that is a resident of the other Contracting State may be taxed in that other State.
This provision also applies to remuneration received as a result of the exercise of functions which, under the legislation of the Contracting State whose company is a resident, are treated as functions of a nature similar to those exercised by a person referred to in that provision.
2. Compensation that a person referred to in subsection 1er receives from a company that is a resident of a Contracting State because of the exercise of a day-to-day direction or technical activity and the remuneration that a resident of a Contracting State derives from his or her personal activity as a partner in a corporation, other than a corporation by shares, that is a resident of a Contracting State, shall be taxable in accordance with the provisions of Article 15, as if it were employment of an employer »
Article VI
Article 17 of the Convention is supplemented by the following paragraph, the current text of this article becoming paragraph 1er :
“2. Where the income of activities that a performance professional or a sportsperson exercises personally and in this capacity is attributed not to the performance professional or to the athlete himself but to another person, such income shall be taxable, notwithstanding the provisions of Articles 7, 14 and 15, in the Contracting State where the activities of the performance professional or sportsperson are exercised. »
Article VII
The provisions of Article 18 of the Convention shall be deleted and replaced by the following provisions:
“1. Subject to the provisions of Article 19, pensions or annuities paid to a resident of a Contracting State shall be taxable only in that State.
2. The term "thinks", used in paragraph 1er, means periodic payments made in respect of an earlier job or in compensation for damage incurred in such a job.
3. However, pensions and other periodic or unpaid allowances, paid in accordance with the social legislation of a Contracting State or under a general regime organized by that Contracting State to supplement the benefits provided by that legislation, are taxable in that State.
4. The term "rentes" means a pre-determined amount payable periodically to fixed maturity, life for or during a specified or determinable period, by virtue of a commitment to make payments in exchange for a full and adequate counter-value in money or its equivalent. »
Article VIII
The provisions of Article 23 of the Convention shall be deleted and replaced by the following provisions:
“1. With regard to Brazil, double taxation is avoided as follows:
Subject to the provisions of Brazilian legislation relating to the imputation on Brazilian tax of taxes paid abroad, where a resident of Brazil receives an income that is taxable in Belgium in accordance with the provisions of this Convention, Brazil grants for the application of its tax a credit equivalent to the tax paid in Belgium.
However, the amount of this credit cannot exceed the fraction of the Brazilian tax calculated according to the proportion of that income compared to all taxable income in Brazil.
2. With regard to Belgium, double taxation is avoided as follows:
(a) When a Belgian resident receives income that is taxable in Brazil in accordance with the provisions of this Convention, with the exception of those of articles 10, paragraphs 2 and 6, 11, paragraphs 2, 3, (b) and 8, and 12, paragraphs 2 and 6, Belgium exempts from tax these revenues, but it may, to calculate the amount of its taxes on the rest of the income of that resident, apply the same rate as if the income in question had not been exempted.
(b) Subject to the provisions of Belgian law relating to the imputation on Belgian tax of taxes paid abroad, where a Belgian resident receives income elements that are included in his or her total income subject to Belgian tax and that consist of taxable dividends in accordance with Article 10, paragraphs 2 or 6, and not exempted from Belgian tax under (c) below, in taxable interest in accordance with Article 11,
However, with respect to such incomes that benefit from imputation in Belgium in accordance with the preceding paragraph and that are paid because of investments that are directly related to industrial, commercial, tourist or agricultural development projects in Brazil, this imputation is calculated as if the Brazilian tax had been collected at a rate of 5 p.c. higher than the rate actually applied. This provision also applies when Brazil waives, under its domestic legislation, to impose the relevant revenues. Imputation ceases to be calculated as if Brazilian tax had been collected at a higher rate of 5 p.c. with respect to Belgian taxes established on taxable periods revenues beginning on 1er January 2012. This paragraph is not applicable to royalties referred to in section 12, paragraph 2, (b).
(c) Where a resident corporation of Belgium has the ownership of shares or shares of a resident corporation of Brazil, the dividends within the meaning of Article 10, paragraph 3, which are paid to it by the latter corporation are exempted, up to 95 p.c. of their amount, from the tax of the companies in Belgium, under the conditions provided by Belgian law.
(d) Notwithstanding the provisions of (a) above, the revenues that have been taxed in Brazil in accordance with sections 13, paragraph 3, or 22 and that are included in the revenues subject to Belgian tax are subject to this tax in accordance with the terms and conditions provided for in Belgian tax legislation with respect to the professional income made and imposed abroad.
(e) Where, in accordance with Belgian law, losses incurred by a company operated by a resident of Belgium in a permanent establishment located in Brazil were effectively deducted from the profits of that undertaking for its taxation in Belgium, the exemption provided for in (a) does not apply in Belgium to the profits of other taxable periods attributable to that establishment, to the extent that such profits were also exempted from tax in Brazil due to their compensation with »
Article IX
Article 24, paragraph 4 of the Convention is deleted and replaced by the following provision:
“4. Except in the case of application of Article 9, Article 11, paragraph 8 or Article 12, paragraph 6, interest, royalties and other expenses paid by an enterprise of a Contracting State to a resident of the other Contracting State shall be deductible, for the determination of the taxable profits of that undertaking, on the same terms as if they had been paid to a resident of the first State. »
Article X
Article 26, paragraph 1 of the Convention is deleted and replaced by the following provision:
"The competent authorities of the Contracting States shall exchange the information necessary to apply the provisions of this Convention or those of the domestic law relating to the taxes of any kind or denomination perceived by or on behalf of the Contracting States to the extent that the taxation it provides is not contrary to the Convention. The exchange of information is not restricted by sections 1er and 2. The information received by a Contracting State shall be kept secret in the same manner as the information obtained under the domestic legislation of that State and shall be communicated only to the persons or authorities (including the courts and administrative bodies) concerned by the establishment or collection of the taxes referred to in the first sentence, by the procedures or prosecutions relating to such taxes, or by the decisions on remedies relating to such taxes. These individuals or authorities only use this information for these purposes. »
Article XI
Article 27 of the Convention paragraphs 1er and 2 are deleted, paragraphs 3, 4, 5 and 6 of this article, respectively becoming paragraphs 1er, 2, 3 and 4.
Article XII
Items 3 and 4 of the Final Protocol are deleted. and replaced by the following:
“3. Ad Article 2, paragraph 2, (b):
It is understood that the taxes referred to in Article 2, paragraph 2, (b), include the social contribution on net profits (Contribuiçao Social sobre o Lucro Liquido, CSLL) established by Law 7, 689 of 15 December 1988. »
“4. Ad Article 10, paragraph 2, article 11, paragraph 2 and article 12, paragraph 2:
It is understood that the benefit of the reduced rates provided for in these provisions is granted, by the Contracting State from which the revenues concerned come, to the only residents of the other Contracting State who are the actual beneficiaries of these revenues. »
“5. Ad Article 10, paragraph 5:
The tax referred to in section 10, paragraph 5, may only be collected on the amount of the profits of the permanent establishment that is effectively transferred or credited to the headquarters of the resident corporation of Belgium. »
« 6. Ad Article 12, paragraphs 2 and 3:
It is understood that the provisions of Article 12, paragraph 3, relate to payments received for technical assistance or the provision of technical services. The tax on these remuneration cannot exceed 10 per cent of their gross amount. »
« 7. Ad Article 23, paragraph 2, (b), 1er subparagraph:
With regard to incomes that benefit from imputation in Belgium, the reference to Belgian legislation to article 23, paragraph 2, (b), 1er paragraph may not have the effect of limiting this imputation to an amount less than the Belgian tax proportionate to the Brazilian source income, when the amount of the tax actually collected in Brazil is equal to or higher the Belgian tax. »
“8. Ad Article 26, paragraph 1er :
With regard to Brazil, it is understood that Article 26, paragraph 1, applies only to taxes collected by the Union. »
Article XIII
“1. Each Contracting State shall notify the other Contracting State of the fulfilment of the procedures required by its legislation for the entry into force of this Additional Convention. The Additional Convention shall enter into force on the day following the day on which the second notification is received.
2. The provisions of the Additional Convention shall apply for the first time:
(a) the taxes collected by way of deduction to the source whose fact-generating occurs from the first January of the year immediately following that of the coming into force;
(b) other taxes on taxable period income beginning on or after January 1 of the year immediately following the coming into force. »
Article XIV
This Additional Convention is an integral part of the Convention and the Final Protocol and will remain in force as long as the Convention and the Final Protocol are applicable.
In faith, the Plenipotentiaries of the two States have signed this Additional Convention and affixed their seals there.
Done in Brasilia, on 20 November 2002, in duplicate, in Portuguese, French and Dutch, the three texts being equally authentic.