The Brazilian tax system provides for a tax benefit in the form of deduction of expenses incurred with the amortization of goodwill. This benefit has been the subject of endless debate since it was first allowed over 37 years ago. In this edition of our Newsletter, we discuss the rules and procedures that regulate the use of goodwill for tax purposes, as well as specific situations in which it has been challenged by tax authorities.
On this issue | July 2021
Overview of Brazilian Goodwill tax Amortization
Goodwill tax amortization stands out as the most relevant tax benefit when speaking of M&A in Brazil, but unorthodox corporate reorganizations coupled with tax authorities’ illegal interpretations have cast a shadow over the incentive.
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"Wed-and-Divorce” transactions: Tax avoidance or Tax Evasion?
The “Wed-and-Divorce” is a highly complex M&A structure designed to allow taxpayers to benefit from the deduction of expenses incurred with the goodwill amortization. Nonetheless, it is also one of the most rewarding, making it a highly risky...
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The Controversial Deduction of Expenses with the So-Called “In-House Goodwill"
Brazilian tax authorities have limited the deduction of expenses incurred with the amortization of goodwill created between companies of the same corporate group. In this article, we address the limits to this restrictive interpretation and...
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Use of “vehicle-companies” in share deals and goodwill tax amortization in Brazil
Tax authorities often deny amortization when a vehicle-company is used. But there are grounds to justify its use and case law is not yet settled on this matter.
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