RV Insights

The Update to the Brazil–Sweden Double Tax Treaty: new withholding tax caps, beneficial ownership and anti-abuse rules.

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Companies with financial flows between Brazil and Sweden will need to reassess their structures in light of the update to the double tax treaty, which lowers the withholding tax caps and introduces new anti-abuse rules.

After more than four decades, the treaty between Brazil and Sweden for the avoidance of double taxation on income, originally dating from 1975, has been updated by the Protocol promulgated through Decree No. 13,006/2026. More than a simple adjustment, the Protocol reduces the withholding tax caps on dividends, interest and royalties, introduces the concept of beneficial owner and brings in the anti-abuse rules of the BEPS Project, aligning the treaty with the international standard.

In this edition of RV Insights, we provide an objective analysis of how the new rules affect the payments that flow most commonly between the two countries, dividends, interest and royalties, at a delicate moment, in which the taxation of outbound profit distributions has also been redesigned under Brazilian domestic law.

The material offers a technical and practical overview of the key points of attention for companies operating between Brazil and Sweden that wish to adapt their structures to the new tax landscape.

This material is particularly relevant for companies that:

• make or receive payments of dividends, interest or royalties between Brazil and Sweden;
• belong to a multinational group with a presence in both countries;
• pay interest on net equity (JCP) or take out long-term international financing;
• need to assess the impact of the new caps and anti-abuse rules on their structures.

What you will find in this material:

• The new maximum withholding tax rates for dividends, interest and royalties;
• The concept of beneficial owner and its practical implications;
• The BEPS anti-abuse rules and the principal purpose test;
• Points of attention on the effective date and the interaction with Brazil's new domestic regime for the taxation of dividends (Law No. 15,270/2025).

About RV Insights

RV Insights is a series produced by R.V. Pinheiro Advogados exclusively for its clients, featuring objective analyses of relevant Brazilian tax matters and their potential impact on business.

This material is purely informative and does not take into account any specific situation or case.

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