The Double Taxation Relief and International Tax Enforcement (Brazil) Order 2023

5 In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. ARTICLE 29 Entitlement to Benefits 1 Except as otherwise provided in this Article, a resident of a Contracting State shall not be entitled to a benefit that would otherwise be accorded by this Convention (other than a benefit under paragraph 3 of Article 4, paragraph 2 of Article 9 or Article 27) unless such resident is a “qualified person”, as defined in paragraph 2, at the time that the benefit would be accorded. 2 A resident of a Contracting State shall be a qualified person at a time when a benefit would otherwise be accorded by the Convention if, at that time, the resident is: a an individual; b that Contracting State, or a political subdivision or local authority thereof, or an agency or instrumentality of that State, political subdivision or local authority; c a company or other entity, if the principal class of its shares is regularly traded on one or more recognised stock exchanges; d a person, other than an individual, that: i is an organisation within the meaning of sub-paragraph b) of paragraph 2 of Article 4, or a non-profit organisation as agreed upon by the competent authorities of the Contracting States, ii is a pension scheme; e a person other than an individual if, at that time and on at least half of the days of a twelve-month period that includes that time, persons who are residents of that Contracting State and that are entitled to benefits of this Convention under subparagraphs a) to d) own, directly or indirectly, at least 50 per cent of the shares of the person. 3 a A resident of a Contracting State shall be entitled to benefits under this Convention with respect to an item of income derived from the other Contracting State, regardless of whether the resident is a qualified person, if the resident is engaged in the active conduct of a business in the first-mentioned State and the income derived from the other State emanates from, or is incidental to, that business. b If a resident of a Contracting State derives an item of income from a business activity conducted by that resident in the other Contracting State, or derives an item of income arising in the other State from a connected person, the conditions described in subparagraph a) shall be considered to be satisfied with respect to such item only if the business activity carried on by the resident in the first-mentioned State to which the item is related is substantial in relation to the same or complementary business activity carried on by the resident or such connected person in the other Contracting State. Whether a business activity is substantial for the purposes of this paragraph shall be determined based on all the facts and circumstances. c For purposes of applying this paragraph, activities conducted by connected persons with respect to a resident of a Contracting State shall be deemed to be conducted by such resident. d Notwithstanding the previous sub-paragraphs, where in accordance with the legislation of a Contracting State (including legislation implemented following the entry into force of this Convention) offshore income derived by a company from the following activities or any combination thereof: i operating as a holding company; ii providing overall supervision or administration of a group of companies; iii providing group financing (including cash pooling); or iv making or managing investments, unless these activities are carried on by a bank, insurance enterprise or registered securities dealer in the ordinary course of its business as such; is not taxed in that State (except in relation to income from dividends) or is taxed at a rate of tax which is lower than 75 per cent of the rate of tax which is applied to income from similar onshore activities, the other Contracting State shall not be obliged to apply any limitation imposed under this Convention on its right to tax the income derived by the company from such offshore activities or on its right to tax the dividends paid by the company. 4 A resident of a Contracting State that is not a qualified person shall nevertheless be entitled to a benefit that would otherwise be accorded by this Convention with respect to an item of income if, at the time when the benefit otherwise would be accorded and on at least half of the days of any twelve-month period that includes that time, persons that are equivalent beneficiaries own, directly or indirectly, at least 75 per cent of the shares of the resident. 5 If a resident of a Contracting State is neither a qualified person pursuant to the provisions of paragraph 2 of this Article, nor entitled to benefits under paragraph 3 or 4, the competent authority of the Contracting State in which benefits are denied under the previous provisions of this Article may, nevertheless, grant the benefits of this Convention, or benefits with respect to a specific item of income, taking into account the object and purpose of this Convention, but only if such resident demonstrates to the satisfaction of such competent authority that neither its establishment, acquisition or maintenance, nor the conduct of its operations, had as one of its principal purposes the obtaining of benefits under this Convention. The competent authority of the Contracting State to which a request has been made, under this paragraph, by a resident of the other State, shall consult with the competent authority of that other State before either granting or denying the request. 6 For the purposes of this and the previous paragraphs of this Article: a the term “recognised stock exchange” means: i the B3 S.A. and any other Brazilian stock exchange recognised under Brazilian law; ii the London Stock Exchange, CBOE Europe Limited and any other United Kingdom investment exchange recognised under United Kingdom law; or iii any other stock exchange agreed upon by the competent authorities of the Contracting States; b with respect to entities that are not companies, the term “shares” means interests that are comparable to shares; c the term “principal class of shares” means the class or classes of shares of a company or entity which represents the majority of the aggregate vote and value of the company or entity; d two persons shall be “connected persons” if one owns, directly or indirectly, at least 50 per cent of the beneficial interest in the other (or, in the case of a company, at least 50 per cent of the aggregate vote and value of the company’s shares) or another person owns, directly or indirectly, at least 50 per cent of the beneficial interest (or, in the case of a company, at least 50 per cent of the aggregate vote and value of the company’s shares) in each person. In any case, a person shall be connected to another if, based on all the relevant facts and circumstances, one has control of the other or both are under the control of the same person or persons; e the term “equivalent beneficiary” means any person who would be entitled to benefits with respect to an item of income accorded by a Contracting State under the domestic law of that Contracting State, this Convention or a relevant double taxation agreement of that State which are equivalent to, or more favourable than, benefits to be accorded to that item of income under this Convention. For the purposes of determining whether a person is an equivalent beneficiary with respect to dividends received by a company, the person shall be deemed to be a company and to hold the same capital of the company paying the dividends as such capital the company claiming the benefit with respect to the dividends holds. 7 The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article. 8 Where an enterprise of a Contracting State derives income from the other Contracting State and the first-mentioned Contracting State treats that income as profits attributable to a permanent establishment situated in a third jurisdiction, the benefits of this Convention shall not apply to that income if that income is subject to a combined aggregate effective rate of tax in the first-mentioned Contracting State and the jurisdiction in which the permanent establishment is situated that is less than the general statutory rate of company tax applicable in the first-mentioned Contracting State. If benefits under this Convention are denied pursuant to the preceding sentence with respect to an item of income derived by a resident of a Contracting State, the competent authority of the other Contracting State may, nevertheless, grant these benefits with respect to that item of income if, in response to a request by such resident, such competent authority determines that granting such benefits is justified in light of the reasons such resident did not satisfy the requirements of this paragraph (such as the existence of losses). The competent authority of the Contracting State to which a request has been made under the preceding sentence shall consult with the competent authority of the other Contracting State before either granting or denying the request. 9 Notwithstanding the other provisions of this Convention, a benefit under this Convention shall not be granted in respect of an item of income or a capital gain if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of this Convention. 10 Where a benefit under this Convention is denied to a person under paragraph 9, the competent authority of the Contracting State that would otherwise have granted this benefit shall nevertheless treat that person as being entitled to this benefit, or to different benefits with respect to a specific item of income or a capital gain, if such competent authority, upon request from that person and after consideration of the relevant facts and circumstances, determines that such benefits would have been granted to that person in the absence of the transaction or arrangement referred to in paragraph 9. The competent authority of the Contracting State to which the request has been made will consult with the competent authority of the other State before rejecting a request made under this paragraph by a resident of that other State. ARTICLE 30 Members of Diplomatic Missions and Consular Posts Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements. ARTICLE 31 Entry into Force

1 Each of the Contracting States shall notify in writing through diplomatic channels to the other the completion of the procedures required by its law for the bringing into force of this Convention.

2 This Convention shall enter into force upon the date of receipt of the later notification and its provisions shall have effect: a in Brazil: i in respect of taxes withheld at source, on income paid, remitted or credited on or after the first day of January next following the date upon which the Convention enters into force; and ii in respect of other taxes, on income arising in the taxable years beginning on or after the first day of January next following the date upon which the Convention enters into force. b in the United Kingdom: i in respect of taxes withheld at source, for amounts paid or credited on or after the first day of the second month next following the date on which this Convention enters into force; ii in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6th April next following the date on which this Convention enters into force; and iii in respect of corporation tax, for any financial year beginning on or after 1st April next following the date on which this Convention enters into force.

3 The Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Federative Republic of Brazil to Avoid the Double Taxation of Profits Derived from Shipping and Air Transport, signed at Brasilia on 27 July 2005, and the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Federative Republic of Brazil to Avoid the Double Taxation of Salaries, Wages and Other Remuneration Derived by a Member of the Crew of an Aircraft Operated in International Traffic, signed at Brasilia on 2 September 2010, shall be suspended and shall not have effect as long as this Convention has effect. ARTICLE 32 Termination This Convention shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate this Convention, through diplomatic channels, by giving written notice of termination at least six months before the end of any calendar year beginning after the expiry of five years from the date of entry into force of this Convention. In such event, this Convention shall cease to have effect: a in Brazil: i in respect of tax withheld at source, on income paid, remitted or credited on or after the first day of January next following the calendar year in which the notice is given; and ii in respect of other taxes, on income arising in the taxable years beginning on or after the first day of January next following the calendar year in which the notice is given. b in the United Kingdom: i in respect of taxes withheld at source, for amounts paid or credited after the date that is six months after the date on which notice of termination was given; ii in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6th April next following the date on which the notice is given; and iii in respect of corporation tax, for any financial year beginning on or after 1st April next following the date on which the notice is given. In witness whereof the undersigned, duly authorised thereto, have signed this Convention. Done in duplicate at Brazil, this 29 day of November 2022, in the English and Portuguese languages, both texts being equally authentic. For the Government of the United Kingdom of Great Britain and Northern IrelandFor the Government of the Federative Republic of BrazilMelanie HopkinsJúlio César Vieira Gomes PROTOCOL At the moment of the signature of the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Federative Republic of Brazil for the Elimination of Double Taxation with Respect to Taxes on Income and on Capital and the Prevention of Tax Evasion and Avoidance, the undersigned, duly authorised thereto, have agreed upon the following provisions which constitute an integral part of the Convention.

1 With reference to the Convention In accordance with the Commentary to Article 1 of the United Nations Model Double Taxation Convention between Developed and Developing Countries on “Improper use of tax treaties” (as it may be revised from time to time), it is understood that this Convention shall not be interpreted to mean that a Contracting State is prevented from applying its domestic legal provisions on the prevention of tax evasion or tax avoidance, including provisions of its tax law regarding “thin capitalization” or to avoid the deferral of payment of the income tax such as the “controlled foreign corporations/CFCs” legislation.

2 With reference to Article 3 It is understood, with reference to subparagraphs a) and b) of paragraph 1 of Article 3, nothing in this Convention shall prejudice the position of either Contracting State with regard to any issues concerning territorial sovereignty, sovereignty over maritime areas or any other issues concerning the law of the sea, including the compatibility of that position with international law.

3 With reference to Article 9 It is understood that the adjustment referred to in paragraph 2 of Article 9 will be made only if the other Contracting State agrees, both in principle and as regard the amount, to the adjustment made by the first-mentioned Contracting State.

4 With reference to Articles 10, 11 and 12 If, after the date of signature of this Convention, Brazil agrees, in a convention with any other State, to rates that are lower (including any exemption) than the ones provided in Articles 10, 11 and 12, the Contracting States shall consult with each other to consider whether to update this Convention. The competent authority of Brazil shall notify the competent authority of the United Kingdom of any such new convention as soon as reasonably practicable after the rate has been agreed.

5 With reference to Article 11 a It is understood that “interest on the company’s equity” (“juros sobre o capital próprio” in Portuguese) paid in accordance with the Brazilian law is considered interest for the purposes of paragraph 3 of Article 11. b It is understood that the provisions of sub-paragraph b) of paragraph 2 of Article 11 shall apply to interest paid to an agency (including a financial institution) wholly owned by the Government of a Contracting State or by a political subdivision thereof only when such interest is received by the agency in connection with its functions of public nature.

6 With reference to Article 12 It is understood that, in the case of Brazil, in classifying as royalties payments received as consideration for information (know-how) concerning industrial, commercial or scientific experience, the scope of information of an industrial, commercial or scientific nature is not limited to that arising exclusively from previous experience.

7 With reference to Article 13 If, after the date of signature of this Convention, Brazil agrees, in a Convention with any other State which is a member of the Organization for Economic Cooperation and Development (OECD), excluding any State in Latin America, to rates that are lower (including any exemption) than the ones provided in paragraph 2 of Article 13, then such rates shall, for the purposes of this Convention, automatically be applicable under the same terms, from the time and for as long as such rates are applicable in that other Convention.

8 With reference to Article 17 It is understood that, in the case of Brazil, the provisions of Article 17 apply also to members of the administrative and fiscal councils.

9 With reference to Article 26 a It is understood that the provisions of paragraph 5 of Article 10 are not in conflict with the provisions of paragraph 2 of Article 26. b It is understood that the provisions of the Brazilian tax law which do not allow that royalties as defined in paragraph 3 of Article 12, paid by a permanent establishment situated in Brazil to a resident of the United Kingdom that carries on business in Brazil through such a permanent establishment, be deductible at the moment of the determination of the taxable income of the above referred permanent establishment, are not in conflict with the provisions of Article 26 of the present Convention. c With reference to paragraph 6 of Article 26, it is understood that, notwithstanding the fact that United Kingdom nationals are entitled to United Kingdom personal allowances whether they are resident in the United Kingdom or in Brazil, United Kingdom personal allowances are not available to Brazilian nationals who are not resident in the United Kingdom. However, Brazilian nationals who are resident in the United Kingdom are entitled to United Kingdom personal allowances.

10 With reference to Article 27 For purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of this Convention may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph 3 of Article 27 or, failing agreement under that procedure, pursuant to any other procedure agreed to by both Contracting States.

11 With reference to Article 28 a It is understood that, in relation to the requests presented by Brazil, the taxes referred to in paragraph 1 of Article 28 mean federal taxes only. b The Contracting States affirm their commitment to spontaneously exchange information which they consider to be of interest to the other State.

12 With reference to Article 29 a In relation to the activities listed in sub-paragraph d) of paragraph 3 of Article 29, the following non-exhaustive list of factors is to be considered, together with the location of the shareholders, activities and assets, in order to determine whether the resident is engaged in the active conduct of a business for the purpose of sub-paragraph a). It is understood that not all factors may be present in every business, and a comprehensive analysis of the listed factors present in a business is to be carried out to determine if there is an active conduct of a business: i Whether at least half of the statutory board members of the company with powers to decide (key management and commercial decisions that are necessary for the conduct of the entity’s business as a whole) are resident in the State of residency of the company and whether they have equal decision-making powers to the non-resident board members. Members of the supervisory board are not required to be considered; ii Whether the board members resident in the State of residence of the company have sufficient knowledge and the capacity to perform their tasks, including making decisions on transactions and managing the completion of transactions; iii Whether the company has qualified staff to manage and register the transactions in its residence State. For this purpose, the staff should be able to conduct the day-to-day activities necessary for preparing and making those decisions in that State; iv Whether the decisions by the board meetings of the company are made by persons physically present in that State. The board meetings are not held in another jurisdiction or held electronically outside the residence State (video conferencing or over the phone). During the board meetings the key management and commercial decisions that are necessary for the conduct of the entity’s business are in substance and with independency being made; v Whether the most important bank accounts are held in the company’s residence State and the company has the decision-making power and the entitlement to the account; vi Whether the company has an office space in the residence State that is used and has been properly equipped for a period of at least 24 months; vii Whether the company has appropriate equity with regard to the risks inherent in its activities. b It is understood that the benefits granted by a competent authority of a Contracting State under paragraph 5 of Article 29 are the benefits available in that State and that paragraph 5 does not oblige the other Contracting State to grant any benefits. c It is understood that, for the purpose of subparagraph e) of paragraph 6 of Article 29, a relevant double taxation agreement is an agreement that would be applicable between the Contracting State in which the item of income arises and the State of residence of the equivalent beneficiary if the equivalent beneficiary had received the relevant item of income directly. In witness whereof the undersigned, duly authorised thereto, have signed this Protocol. Done in duplicate at Brazil, this 29 day of November 2022, in the English and Portuguese languages, both texts being equally authentic. For the Government of the United Kingdom of Great Britain and Northern IrelandFor the Government of the Federative Republic of BrazilMelanie HopkinsJúlio César Vieira Gomes

Signed

Ceri King — Deputy Clerk of the Privy Council

Explanatory note

(This note is not part of the Order)

EXPLANATORY NOTE

This Order gives effect to two arrangements between the United Kingdom and the Federative Republic of Brazil which are made with a view to affording relief from double taxation.

In this Order, article 1 provides for citation. Article 2 makes declarations as to the effect and content of the arrangements set out in Schedules 1 and 2. Article 3 revokes the Double Taxation Relief (Shipping and Air Transport Profits) (Brazil) Order 1968 (S.I. 1968/572) and makes transitional arrangements relating to it.

Schedule 1 to this Order contains an Agreement (“the 2005 Arrangements”) between the United Kingdom and the Federative Republic of Brazil in relation to the elimination of double taxation with respect to taxes on income or profits derived from shipping and air transport.

The 2005 Arrangements aim to eliminate the double taxation of income derived from shipping and air transport. This is done by allocating the taxing rights that each country has under its domestic law over the same income solely to the country of the undertaking.

The 2005 Arrangements take effect retrospectively, from 1 January 1967, in accordance with Article 4 of those arrangements. The 2005 Arrangements are to be suspended once the arrangements set out in Schedule 2 take effect, in accordance with paragraph 3 of Article 31 of the Convention.

Schedule 2 to this Order contains a Convention and Protocol (“the 2022 Arrangements”) between the United Kingdom and the Federative Republic of Brazil in relation to the elimination of double taxation with respect to taxes on income and on capital, the prevention of tax evasion and avoidance, and assisting international tax enforcement.

The 2022 Arrangements, in accordance with paragraph 3 of Article 31 of the Convention, suspend the agreements mentioned in that paragraph, in relation to taxes with effect on and after the date the 2022 Arrangements take effect, between the United Kingdom and the Federative Republic of Brazil signed at Brasilia on 27 July 2005 and at Brasilia on 2 September 2010.

The 2022 Arrangements aim to eliminate the double taxation of income and gains arising in one country and paid to residents of the other country. This is done by allocating the taxing rights that each country has under its domestic law over the same income and gains, and by providing relief from double taxation. There are also specific measures which combat discriminatory tax treatment and provide for assistance in international tax enforcement.

The 2022 Arrangements will enter into force on the date of the later of the notifications by each country of the completion of its legislative procedures and will take effect in each territory in accordance with paragraph 2 of Article 31 of the Convention.

The date of entry into force of the 2022 Arrangements will, in due course, be published in the London, Edinburgh and Belfast Gazettes.

A Tax Information and Impact Note has not been produced for the Order as it gives effect to double taxation agreements. Double taxation agreements impose no obligations on taxpayers, rather they seek to eliminate double taxation and fiscal evasion.

Footnotes