Brazil vs “CCA group”, September 2019, COSIT, SC No. 276-2019

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In a public ruling, the General Tax Coordination Office in Brazil (COSIT) found that a transaction labled as a “cost sharing agreement” between a foreign group and its Brazilian subsidiary, was in fact a mere agreement for provision of services.

COSIT pointed to the key characteristics of cost sharing agreements. These had been listed in a prior ruling from 2012:

    • Segregation of costs and risks inherent in the development, production or acquisition of goods, services or rights;
    • Consistent contribution by each entity with expected and effectively-received benefits by each entity;
    • Identification of the benefit to each participant entity;
    • Mandatory reimbursement of costs incurred with no mark-up;
    • Advantages offered to all participating group entities; and
    • Payments for support activities whether such activities were actually used.

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SC_Cosit_n_276-2019





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