The Normative Instruction IRS No. 1,846/2018 (NI), regarding Mutual Agreement Procedure (MAP) addressed by Treaties for the avoidance of double taxation, was published in the Official Gazette of November 29, 2018.

MAP is a mechanism by which a person can present his case to the competent authority if he considers that actions of one or both of the Contracting States result or will result in taxation not in accordance with the provisions of the Treaty, regardless of the remedies provided by the domestic law. The drafting related to MAP can be found in Article 25 of the OECD and UN Tax Convention Models and was adopted by Brazil (with some variations) in all Treaties for the avoidance of double taxation.

According to the NI, the MAP may involve a unilateral stage and a bilateral stage. On one hand, the unilateral stage regards the examination of the requirement solely by the Brazilian IRS, without a participation of a foreign authority. If possible, the Brazilian competent authorities can conclude the MAP. On the other hand, a bilateral stage concerns the examination by Brazilian and foreign competent authorities together, in order to either solve a case not unilaterally concluded or a MAP requirement filed abroad.

Generally speaking, a MAP requirement can be filed by a person or legal entity resident in Brazil before the Brazilian IRS, within the term established by the Treaty.

The NI provides a wide list of documents that must be presented together with the MAP requirement. It is worth noting that foreign documents must be presented with their respective translated copies, unless they are written in English or Spanish.

The MAP requirement must address exclusively Income Tax, Social Contribution on Net Profit (CSLL) or foreign taxes covered by the Treaty.

The MAP is concluded either when the claimant is notified of its result or when the claimant moves for a discontinuance of the proceeding. It is important to underline that there is no possibility of appeal against a MAP solution.

Lastly, for a MAP result to be enforced, the claimant must declare his acceptance regarding the solution and present waivers of current administrative and judicial lawsuits dealing with the same subjects in Brazil or abroad.

The full text of the NI is available in Portuguese here.