Brazil–New Zealand
Tax Guide
A practical guide to the tax framework governing transactions, investments, and individuals operating between Brazil and New Zealand.
Contact UsTwo countries with no tax treaty and very different tax systems.
Brazil and New Zealand have no bilateral tax treaty in force. Each country taxes cross-border flows under its own domestic rules, without treaty-reduced withholding rates, permanent establishment safe harbours or a mutual agreement procedure for resolving double taxation. The absence of a treaty, combined with the structural differences between the two tax systems, makes careful planning important for investors and individuals operating between the two countries.
This guide covers Brazilian withholding income taxes on outbound payments to New Zealand recipients, how those taxes stack on a single transaction, New Zealand’s taxation of Brazil-sourced income (including the CFC and FIF regimes), transfer pricing, and key structuring considerations. For advice specific to your situation, contact us.
Having no DTA does not mean being double-taxed, but it does mean paying more attention.
Brazil and New Zealand have no bilateral tax treaty, but for most well-structured arrangements this is manageable rather than prohibitive. Both countries’ domestic foreign tax credit rules effectively prevent double taxation on the same income in the majority of cases, and New Zealand’s own tax profile, including the absence of a general capital gains tax and a flat 28% corporate rate, means the overall cost of a Brazil–NZ structure often compares favourably with other non-treaty jurisdictions.
New Zealand has a broad DTA network, but Brazil is not among its treaty partners. Brazil’s own network is relatively limited for an economy of its size, and many international investors operating in Brazil are already working in a non-treaty environment. Without a DTA, each country applies its statutory withholding rates in full and relief from double taxation comes entirely from unilateral foreign tax credit provisions. The practical result for well-structured arrangements is broadly comparable to what a DTA would achieve. The more significant constraint is the absence of a bilateral mutual agreement procedure: if both tax authorities adjust the same transaction in different directions, the resulting double taxation must be resolved through domestic proceedings rather than a shared dispute resolution channel.
Full statutory withholding rates, offset by foreign tax credits
Brazil’s Withholding Income Tax (IRRF) applies at statutory rates on payments to New Zealand investors. There are no treaty-reduced rates, but New Zealand’s foreign tax credit rules under subpart LJ of the Income Tax Act 2007 generally allow IRRF paid to be credited against the New Zealand tax liability on the same income, reducing or eliminating double taxation in most cases.
Residence and permanent establishment under domestic law
Tax residence is established under each country’s own legislation. Whether a New Zealand business creates a taxable presence in Brazil (or vice versa) is determined by each country’s domestic permanent establishment rules. Most standard business arrangements do not create an unexpected taxable presence in either jurisdiction.
No MAP: transfer pricing disputes resolved domestically
Both countries now apply OECD arm’s-length transfer pricing rules, but without a mutual agreement procedure (MAP), any dispute between the Federal Revenue Department and Inland Revenue New Zealand over the same transaction must be resolved domestically. Sound upfront documentation matters more as a result.
New Zealand’s CGT-free status benefits Brazil-sourced gains
New Zealand does not impose a general capital gains tax. Gains on the disposal of Brazilian assets or company shares will generally not be taxable in New Zealand, provided the investor is not in the business of trading such assets. This is a material structural advantage compared to many other jurisdictions, and can influence how the investment is held.
Information exchange. The absence of a DTA does not limit information exchange between the two countries. Both Brazil and New Zealand are signatories to the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters and participate in the Common Reporting Standard (CRS). The Federal Revenue Department (Receita Federal do Brasil) and Inland Revenue New Zealand exchange financial account data on their respective residents annually. Opacity is not a practical planning option.
The main taxes that affect cross-border operations
The following taxes arise in virtually every substantive business relationship between New Zealand and Brazilian entities. Each operates independently; satisfying one obligation does not reduce or eliminate any other.
Brazilian corporate income tax: IRPJ and CSLL
Brazilian companies are subject to Corporate Income Tax (Imposto de Renda das Pessoas Jurídicas, IRPJ) at 15%, with a 10% surtax on annual taxable income exceeding R$240,000, and Social Contribution on Net Income (Contribuição Social sobre o Lucro Líquido, CSLL) at 9% for most companies. The combined standard rate under the Actual Profit regime is effectively 34%. Many companies qualify for the Deemed Profit regime and pay considerably less. See below.
New Zealand income tax: corporate, CFC and FIF
New Zealand resident companies pay income tax at a flat 28% rate on worldwide income. NZ investors in Brazilian companies must consider the controlled foreign company (CFC) rules under subpart EX of the Income Tax Act 2007, which may attribute undistributed Brazilian profits annually, and the foreign investment fund (FIF) rules for minority holdings below 10%.
Brazilian withholding income tax (IRRF) on outbound payments
Brazil imposes Withholding Income Tax (Imposto de Renda Retido na Fonte, IRRF) on payments to non-residents. Key rates: dividends 10% (Law 15,270/2025); interest 15%; royalties and technical services 15%; general services 25%. New Zealand is not on Brazil’s list of low-tax jurisdictions, so the elevated 25% rate does not apply to standard NZ structures. With no DTA, NZ recipients cannot reduce these rates.
Transfer pricing: dual compliance obligations
Both countries now apply OECD arm’s-length transfer pricing rules. Brazil’s regime was reformed by Law 14,596/2023. New Zealand’s rules operate under subpart GC of the Income Tax Act 2007. Related-party transactions between NZ and Brazilian entities must independently satisfy both regimes. Without a bilateral mutual agreement procedure (MAP), disputes cannot be resolved bilaterally.
Brazilian indirect taxes: PIS, COFINS, ICMS and ISS
Brazilian businesses face a layered indirect tax burden: PIS (0.65–1.65%) and COFINS (3–7.6%) on gross revenue; ICMS (state-level consumption tax similar to GST, typically 12–18%) on goods; and ISS (municipal services tax, 2–5%) on services. Cross-border service payments from Brazil to NZ providers attract PIS/COFINS-Import on the Brazilian side. These are not creditable by the NZ recipient and represent a real additional cost.
New Zealand GST on cross-border supplies
New Zealand Goods and Services Tax (GST) at 15% applies to taxable supplies in New Zealand. Cross-border services supplied to Brazilian businesses are generally zero-rated where the recipient is a non-resident not in New Zealand at the time of supply. NZ GST and Brazil’s CBS/IBS regime are structurally similar destination-principle consumption taxes, which simplifies the analysis of where each applies.
IOF: Brazil’s financial transactions tax
Brazil’s Tax on Financial Transactions (Imposto sobre Operações Financeiras, IOF) applies to foreign exchange transactions, credit operations and insurance. Cross-border loan transactions attract IOF on the foreign exchange leg. IOF on loan proceeds was reduced to 0% for loans exceeding 180 days following a 2022 reform. Capital contributions in cash attract IOF at 0.38% on the exchange operation.
Brazilian withholding income taxes on payments to New Zealand recipients
Brazil imposes Withholding Income Tax (Imposto de Renda Retido na Fonte, IRRF) on most categories of income paid to non-resident recipients, including New Zealand entities and individuals. The IRRF is withheld by the Brazilian payer and remitted to the Federal Revenue Department (Receita Federal do Brasil). New Zealand is not on Brazil’s list of low-tax jurisdictions (paraísos fiscais), so standard rates apply.
Withholding income tax (IRRF) rates
| Payment type | IRRF rate | Notes |
|---|---|---|
| Dividends | 10% | Law 15,270/2025 introduced a 10% withholding income tax on dividends remitted abroad. New Zealand shareholders should review their foreign tax credit (FTC) position under subpart LJ of the Income Tax Act 2007, as this IRRF should generally be creditable against New Zealand income tax. |
| Interest | 15%Standard rate | Interest paid to non-residents is generally subject to 15% IRRF. A rate of 25% applies where the beneficiary is resident in a low-tax jurisdiction under Brazilian rules. New Zealand is not a low-tax jurisdiction for Brazilian purposes. |
| Interest on Net Equity (JCP) | 17.5% | Interest on Net Equity (Juros sobre Capital Próprio, JCP) is a Brazilian mechanism allowing notional interest deductions on equity. The IRRF rate on JCP payments to non-residents was increased to 17.5% by Complementary Law 224. |
| Royalties and technical services | 15%CIDE may also apply | Royalties for technology transfer and technical services attract 15% IRRF. The Economic Intervention Contribution (Contribuição de Intervenção no Domínio Econômico, CIDE) of 10% may also apply on technology remittances, borne by the Brazilian payer on top of the contract price. |
| Services (general) | 25% | Remuneration for services rendered by non-resident individuals generally attracts 25% IRRF. Services rendered by non-resident legal entities may be subject to 15% or 25% depending on the nature and structure of the payment. |
| Capital gains | 15–22.5% | Capital gains realised by non-residents on Brazilian assets are subject to a progressive IRRF schedule: 15% up to BRL 5 million, rising to 22.5% above BRL 30 million. Gains on assets of Brazilian companies may also be subject to a 25% rate in certain circumstances. |
| Rental income | 15% | Rental income paid to non-resident individuals or entities is subject to 15% IRRF, withheld by the Brazilian payer. |
Other Brazilian taxes that apply alongside the IRRF
The IRRF is not the only Brazilian tax cost on cross-border payments. Depending on the nature of the transaction, the Brazilian payer may also be liable for the following, borne on top of the contract price rather than deducted from the amount remitted to the New Zealand party.
IOF (Tax on Financial Transactions)
IOF applies to the foreign exchange transaction associated with a cross-border payment. The rate varies by transaction type and tenor and is subject to frequent change by executive decree. It is borne by the Brazilian party executing the currency conversion.
PIS-Import and COFINS-Import
Services imported into Brazil attract PIS-Import and COFINS-Import. The standard non-cumulative rates are 1.65% (PIS-Import) and 7.6% (COFINS-Import), totalling approximately 9.25% of the contract value. Companies taxed on the cumulative basis pay reduced rates of 0.65% and 3% respectively (totalling 3.65%). These contributions are levied on the Brazilian importer of services and are borne in addition to the contract price. Certain categories of imported services or goods may attract specific or reduced rates.
ISS (Municipal Services Tax)
ISS applies to imported services at rates between 2% and 5%, depending on the municipality and the classification of the service. It is assessed on the Brazilian payer on the gross contract value.
CIDE (Economic Intervention Contribution)
CIDE at 10% applies to technology transfer and technical service payments remitted abroad. It is borne by the Brazilian payer on top of the contract value, not withheld from the New Zealand party’s receipt.
Indirect taxes reform: transitional period. 2026 is the first transitional year of Brazil’s new dual-GST system. Companies must now configure for dual compliance: reporting continues under the existing PIS/COFINS system while new Contribuição sobre Bens e Serviços (CBS, a federal tax) and Imposto sobre Bens e Serviços (IBS, a state and municipal tax) fields are tested on electronic invoices. Full abolition of PIS and COFINS begins in 2027, with IBS replacing ICMS and ISS on a phased schedule through 2033. Once fully implemented, CBS and IBS will together operate as a broad-based, destination-principle GST, directly comparable in structure to New Zealand’s own GST. See our Brazil tax reform guide for a full overview and transition roadmap.
The 34% headline rate is not what most Brazilian companies actually pay.
The 34% combined IRPJ/CSLL rate applies under the Actual Profit regime (Lucro Real), where tax is calculated on audited net profit after allowable deductions. Many Brazilian companies instead use the Deemed Profit regime (Lucro Presumido), which produces substantially lower effective rates and has important implications for New Zealand investors modelling their returns.
Actual Profit regime (Lucro Real)
Mandatory for financial institutions and companies with annual gross revenue above R$78 million. Tax is calculated on audited net profit after deductions. IRPJ at 15% plus 10% surtax on income over R$240,000 per year; CSLL at 9%. Combined headline rate: 34% of taxable profit. Available by election to any company regardless of size.
Deemed Profit regime (Lucro Presumido)
Available to companies with annual gross revenue up to R$78 million. Tax base is a fixed percentage of gross revenue rather than actual profit. Services: 32% deemed margin, producing effective combined IRPJ/CSLL on revenue of roughly 11–14%. Commerce and industry: 8% deemed margin, roughly 3–5% on revenue. A highly profitable service company may pay considerably less than 34% of actual profit.
Pillar Two implications. A Brazilian entity on the Deemed Profit regime may fall below the 15% Global Anti-Base Erosion (GloBE) effective tax rate floor depending on its actual profitability, potentially triggering a top-up tax in the New Zealand parent’s jurisdiction even though Brazil’s headline rate is 34%. New Zealand-headquartered multinationals with Brazilian subsidiaries should assess GloBE exposure as part of their annual compliance review. New Zealand enacted its Pillar Two rules under the Income Tax Act 2007 (as amended) effective from 2025.
How Brazilian taxes stack up on a single transaction
When a Brazilian entity makes a payment to a New Zealand recipient, multiple Brazilian taxes can apply simultaneously. The IRRF reduces what the New Zealand party receives; additional taxes (PIS-Import, COFINS-Import, ISS, CIDE, IOF) increase what the Brazilian party pays. The combined effect makes the true cost of a cross-border transaction substantially higher than the face value of the contract.
The examples below use a base contract value of USD 100,000 and the standard non-cumulative PIS-Import and COFINS-Import rates. IOF is excluded given its variability. The New Zealand income tax figures use a simplified 28% corporate rate and do not account for the FIF or CFC adjustments discussed in the next section.
Example 1: Technical services fee
USD 100,000 paid by a Brazilian company to a NZ service provider
Example 2: Technology royalties
USD 100,000 royalty paid by a Brazilian licensee to a NZ licensor
Example 3: Dividend distribution
USD 100,000 dividend remitted by Brazilian subsidiary to NZ parent
Example 4: Intercompany interest payment
USD 100,000 interest paid by Brazilian subsidiary to NZ parent lender
Importing physical goods into Brazil
The taxes above apply to financial flows and services. Physical goods shipped from New Zealand into Brazil face a separate and cumulative customs and indirect tax regime. Goods imports attract Import Tax (Imposto de Importação, II), the Tax on Industrialised Products (Imposto sobre Produtos Industrializados, IPI), PIS-Import and COFINS-Import at the goods rates (which at 2.1% and 9.65% respectively are higher than the 1.65%/7.6% rates that apply to service imports), and ICMS, the state-level consumption tax, calculated on a grossed-up base that includes all other taxes. The combined burden typically adds 40–70% or more to the CIF value depending on the product’s NCM tariff classification and the destination state. The example below uses illustrative rates for typical industrial goods; actual rates must be verified against the applicable NCM code before importation. For a full breakdown of the Brazilian customs and tariff regime, see our Brazil Tax Guide.
Example 5: Merchandise import
USD 100,000 CIF value of industrial goods shipped from New Zealand to Brazil (illustrative tariff rates)
These are simplified illustrations. The actual tax burden depends on the correct classification of the payment under Brazilian and New Zealand law, IOF rates at the time of the currency conversion, the availability and limitations of the foreign tax credit (FTC) under New Zealand’s domestic rules, the applicable PIS-Import and COFINS-Import rates (non-cumulative rates of 1.65%/7.6% are assumed above; companies on the cumulative basis pay 0.65%/3%), the application of the CFC or FIF regimes to the underlying Brazilian entity, and the impact of Brazil’s ongoing indirect taxes reform on PIS/COFINS-Import obligations during the transition period. These figures illustrate the stacking effect and are not a substitute for transaction-specific advice.
New Zealand taxation of Brazil-sourced income
New Zealand taxes its residents on worldwide income. Brazil-sourced income received by New Zealand residents is therefore subject to New Zealand income tax, with relief available through foreign tax credits. Two specific regimes, the controlled foreign company (CFC) rules and the foreign investment fund (FIF) rules, affect how New Zealand residents are taxed on their interests in Brazilian entities even before any income is distributed.
Controlled foreign company (CFC) rules
Under subpart EX of the Income Tax Act 2007, a New Zealand resident who holds 10% or more of a foreign company (including a Brazilian company) in which New Zealand residents collectively hold more than 50% must include a share of the controlled foreign company (CFC)’s income in their New Zealand taxable income annually, regardless of whether any distribution is made.
Brazil is not on New Zealand’s “grey list” of countries whose companies are automatically exempt from the CFC rules. This means that New Zealand investors in Brazilian companies must analyse their CFC exposure every year. The key relief available is the active income exemption: if 95% or more of the CFC’s income is active (broadly, income from the conduct of a business rather than passive investment), the CFC attribution is reduced to zero and no New Zealand tax arises on the undistributed profits.
Active income exemption
If 95% or more of a Brazilian CFC’s income is active income, no CFC attribution arises for New Zealand shareholders. Most operating companies will meet this threshold. The test must be applied annually and documented.
Passive income attribution
Where a Brazilian CFC derives passive income (interest, dividends from non-active subsidiaries, rents, royalties), that passive income may be attributed to the New Zealand shareholder and taxed currently in New Zealand, with a credit for any Brazilian IRRF withheld.
Foreign investment fund (FIF) rules
Where a New Zealand resident holds less than 10% of a foreign company (including Brazilian listed or unlisted companies), the FIF rules under subpart EX of the Income Tax Act 2007 may apply. Under the FIF regime, New Zealand investors are taxed on a deemed return from their foreign investment each year, whether or not any actual income is received. The default method is the fair dividend rate (FDR) method, which deems a return of 5% per annum on the opening value of the investment, taxed at the investor’s marginal rate.
The FIF rules can create a New Zealand tax liability on Brazilian investments even when the Brazilian company pays no dividend and the investor has not realised any gain. New Zealand investors in Brazilian listed equities should review their FIF position before investing and consider the comparative value (CV) method, which may produce a lower tax liability in years when the investment declines in value.
Foreign tax credits
New Zealand allows a credit against New Zealand income tax for foreign income tax paid on foreign-sourced income, under subpart LJ of the Income Tax Act 2007. The credit is limited to the New Zealand tax otherwise payable on the same income. Brazilian IRRF paid on dividends, interest, royalties, and other income generally qualifies as a creditable foreign tax, provided the income is subject to New Zealand tax.
No general capital gains tax in New Zealand. New Zealand does not impose a general capital gains tax. Gains on the disposal of Brazilian assets or Brazilian company shares will generally not be taxable in New Zealand, provided the investor is not in the business of buying and selling such assets and the bright-line property rules do not apply. This is a material advantage for New Zealand investors in Brazilian assets compared to many other jurisdictions, and can influence structuring decisions significantly.
Transfer pricing: two OECD-aligned systems without a MAP
Both Brazil and New Zealand now apply transfer pricing rules aligned with the OECD arm’s-length standard. However, the absence of a DTA means there is no mutual agreement procedure to resolve disputes or eliminate double taxation arising from transfer pricing adjustments in either country.
Brazil’s new transfer pricing rules
Law 14,596/2023 and IN RFB 2,161/2023 replaced Brazil’s former fixed-margin transfer pricing system with rules aligned with the OECD Transfer Pricing Guidelines, effective from 2024. Under the new rules, intercompany transactions between Brazilian and New Zealand related parties are tested against the arm’s-length standard using comparability analysis and OECD-approved methods (CUP, resale price, cost-plus, TNMM, profit split). The absence of a mutual agreement procedure (MAP) mechanism between Brazil and New Zealand means that if both countries adjust the same transaction in different directions, the resulting double taxation must be resolved through domestic proceedings rather than a bilateral procedure.
New Zealand’s transfer pricing rules
New Zealand’s transfer pricing rules under subpart GC of the Income Tax Act 2007 also follow the OECD arm’s-length standard. Related-party transactions between New Zealand and Brazilian entities must be priced consistently with what independent parties would agree. Inland Revenue New Zealand may adjust the New Zealand entity’s taxable income if the transfer price does not reflect arm’s-length terms.
Country-by-Country Reporting (CbCR). Both Brazil and New Zealand participate in the OECD Base Erosion and Profit Shifting (BEPS) Inclusive Framework and have implemented Country-by-Country Reporting (CbCR). Multinational groups with operations in both countries and consolidated revenue above the applicable threshold (broadly NZD 1.2 billion for NZ; BRL 2.26 billion for Brazil) must file CbCR reports in their ultimate parent entity’s jurisdiction. These reports are exchanged between tax authorities, including the Federal Revenue Department (Receita Federal do Brasil) and Inland Revenue New Zealand, under the Multilateral Competent Authority Agreement on the Exchange of CbCR.
Thin capitalisation. Both countries impose thin capitalisation rules that limit interest deductions on excessive related-party debt. Brazil restricts interest deductibility where related-party debt exceeds a prescribed ratio under Law 14,596/2023. New Zealand’s rules under subpart FE of the Income Tax Act 2007 apply where offshore debt exceeds 60% of total assets (for most groups). Intercompany loan arrangements between Brazilian and New Zealand entities must be structured to comply with both regimes simultaneously.
Structuring considerations for New Zealand investors in Brazil
In the absence of a DTA, the holding structure chosen for a New Zealand investment in Brazil has a direct and material impact on the overall tax burden and on New Zealand’s CFC and FIF exposure.
Holding structure
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Direct NZ holding The simplest structure. New Zealand corporate shareholders will receive dividends net of 10% IRRF under Law 15,270/2025, creditable against New Zealand tax. The Brazilian subsidiary will be a CFC for New Zealand purposes, requiring an annual active income assessment.
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Intermediate DTA-country holding Routing the investment through a country that has both a DTA with Brazil and an acceptable tax relationship with New Zealand can reduce IRRF on outbound flows from Brazil and provide a MAP mechanism for transfer pricing disputes. Singapore, the Netherlands, and the UAE each have DTAs with Brazil. The intermediate holding structure must be assessed against Brazil’s beneficial ownership and anti-avoidance rules.
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Brazilian holding (Ltda. or S.A.) Interposing a Brazilian holding company consolidates local operations and defers the 10% IRRF, which applies only on remittances abroad under Law 15,270/2025, not on distributions between Brazilian entities. Foreign investment must be registered with the Central Bank of Brazil.
The FIF rules and listed Brazilian equities
New Zealand investors holding less than 10% of Brazilian listed companies are subject to the FIF regime rather than the CFC rules. Under the fair dividend rate (FDR) method, a deemed 5% return is taxable each year regardless of actual income. For investors in Brazilian equities that underperform or produce no dividend, this can result in a New Zealand tax liability with no corresponding income or foreign tax credit. New Zealand investors in Brazilian equities should model their FIF position carefully and consider whether the comparative value method or another applicable FIF method produces a more favourable outcome.
Debt financing
Where a New Zealand entity lends to a Brazilian related party, the Brazilian side bears 15% IRRF on interest paid, withheld at source and remitted to the Federal Revenue Department. This should be modelled as a cost of the lending arrangement from the New Zealand investor’s perspective, with relief available under the foreign tax credit rules to the extent the interest is brought to account as New Zealand taxable income.
Key takeaways for NZ investors
Assess CFC status before investing
Any New Zealand investor acquiring 10% or more of a Brazilian company should assess CFC status and the availability of the active income exemption before completing the investment. Annual compliance is required.
Register the investment with the Central Bank of Brazil
Foreign direct investment in Brazil must be registered with the Central Bank of Brazil. Correct registration is a precondition for the repatriation of capital and the remittance of profits.
No social security totalisation agreement
Brazil and New Zealand do not have a social security totalisation agreement. Individuals working in one country for an employer based in the other may be required to contribute to both countries’ social security systems simultaneously, increasing total employment costs.
Coordinate NZ and Brazilian advisers
In the absence of a DTA, the interaction between New Zealand and Brazilian tax rules requires coordinated advice in both jurisdictions. My law firm works alongside New Zealand tax counsel on cross-border Brazil–NZ mandates.
This guide is a general overview only and does not constitute legal or tax advice. Tax laws in both countries change frequently, including legislative reforms currently in progress, and the information in this guide reflects the position as understood at the time of publication. The specific tax treatment of any transaction depends on the facts, the structure adopted, and the current state of the law in each jurisdiction. Obtain specific legal and tax advice before structuring any cross-border transaction.
Need advice on your Brazil–New Zealand tax structure?
This guide provides general information only. The interaction of Brazilian and New Zealand tax rules in the absence of a DTA requires careful, transaction-specific analysis. Contact us to discuss your situation.
