Brazil Cross-border Payments under Cost Sharing Agreement for Software License Taxed as Royalties

Brazil has published Private Ruling 442 of 18 September 2017, concerning the withholding tax treatment of payments made by a Brazilian resident company to its Italian parent under a cost sharing agreement for a foreign software license acquired by the parent from a third party (software used by the Brazilian company). The ruling provides that because the payment is for the reimbursement of the cost of acquisition of the software license, such payment can be considered and treated as a royalt…