The new Instruction on Income Tax introduces changes in the treatment of payments for intangible assets, which are now classified as “royalties” and are subject to withholding tax.
The term “royalties” includes:
- Copyrights on literary, artistic and scientific works;
- Patents, trademarks, inventions, licenses and designs;
- Payments for the use of licensed software;
- Rights to broadcast television, radio and online content;
- Technical information and specific industrial, commercial and scietific expertise.
How does this impact your business?
The tax administration may require additional documentation to determine the exact nature of the payments. To avoid legal and taxt uncertainties, a careful analysis of contracts is essential.
In cases where international agreements on the avoidance of double taxation apply, the OECD and UN rules will serve as the primary guidelines.
