The Government of the Federative Republic of Brazil (“Brazil”) and the
Government of the United Kingdom of Great Britain and Northern Ireland
(“United Kingdom”) signed, on 29th November 2022, the Convention for
the Avoidance of Double Taxation, and the prevention of tax evasion with
respect to Taxes on Income and on Capital (the “Treaty”).

The Treaty, which is still being processed within the Brazilian Ministry of
Foreign Affairs, will enter into force after the completion of legislative and
ratification procedures in Brazil and in the United Kingdom and exchange
of notes between both countries. It is compliant with the model convention
adopted by the OECD.

The main objective of the Treaty is to establish legal certainty and promote
increased bilateral trade flows and attraction of investments for both
countries, besides establishing the following measures:

1. Taxation with application of rates between 10% and 15% over
dividends paid in both countries and rules to avoid double taxation should
taxation be established on dividends distributed by Brazilian companies.

2. Establishes a rate of 15% for withholding tax on interest (including
interest on capital), and exemption for payments made to pension plans
or to the Government of the other Contracting State, a rate of 7% for banks
or insurance companies on financing for infrastructure or public utility
projects with a minimum term of 5 years, and a rate of 10% on
transactions with banks or insurance companies in general, securities
traded on stock exchanges and financed sales of machinery and

3. Establishes a beneficial rate of 10% for all types of royalties (most
treaties ratified by more Brazil establish a rate of 15% as a limitation for
withholding tax on royalty payments to beneficiaries resident in both
contracting jurisdictions).

4. Authorizes withholding tax on payments as remuneration for
managerial, technical, or consulting services, with application of the
following decreasing rates: 8% during the first two years of the Treaty’s
effectiveness, 4% during the third and fourth years, and 0% after the fourth

5. Establishes that if Brazil adopts, with any other OECD member
country (except Latin American countries), lower rates, the lower rates will
automatically apply to the Treaty.

6. Establishes corresponding transfer pricing adjustments through a
friendly procedure, in accordance with guidelines established by OECD,
and with possible convergence of Brazilian transfer pricing rules to the
OECD model.
Finally, the Treaty will suspend agreements formerly entered into by Brazil
and the United Kingdom, such as:

(i) Agreement to Avoid Double Taxation on Profits Arising from Sea and Air
Transport, signed on 27th July 2005, and

(ii) Agreement to Avoid Double Taxation on Wages, Salaries and Other
Remuneration Paid to Aircrew Members of Aircraft Operated in
International Traffic, signed in Brasilia on 2nd September 2010.

Montgomery & Associados is available to clarify any queries related to the
matter at hand.