Doing Business in Brazil

4.3. Technology


One of the areas of great interest in the intellectual property field is the subject of technology (non-patented), the know-how, as Brazil, being a developing country, is continuously receiving new technologies from abroad with the purpose of improving its economic capacity. It is by means of technology transfer agreements that the Brazilian and foreign parties negotiate and regulate these interests.

Technology Transfer/Supply Agreements

As of the beginning of the ‘70s, the promotion of the entry of technology into Brazil was regulated locally, and the Brazilian Patent and Trademark Office (INPI – Instituto Nacional da Propriedade Industrial) was designated as the governmental authority authorized to scrutinize the technology supply agreements and the other contracts that involved intellectual property rights (i.e., patent licenses, trademark licenses, franchise agreements, technical assistance agreements, etc.).

By applying the Law 5.648/70 and the Normative Act no. 15/75, the INPI adopted an extremely interventionist position in the technology supply agreements, which ultimately caused the contract registration process to be lengthy, with official requirements that the INPI issued out of its self-established rules and interpretations.

In the ‘90s the deregulation of the Brazilian economy was initiated, thus allowing a progressive entry of new technologies originated from the developed countries. Pursuant to article 50 of Law 8.383/92, it became possible to remit payments between a subsidiary and its parent company (controlled and controlling companies) under technology supply agreements (and other intellectual property licenses as well) that had been executed between parties and registered with the INPI and with the Central Bank of Brazil – BACEN after December 31, 1991. The remittance of payments between a branch company and its parent company continues to be not allowed according to the Brazilian law.

Pursuant to the enactment of Normative Act no. 120/93 and Law 9.279/96 (the Brazilian Intellectual Property Law), the INPI assumed a more liberal position in the recording/registration of the technology supply and intellectual property licensing agreements.

The Article 211 of Law 9.279/96, stipulates that technology transfer agreements must be registered by INPI as follows: (i) to make it possible to submit payments abroad, with due regard to the exchange and tax rules applied; (ii) enable the tax deductions of these payments, observing the tax laws; (iii) validity against third parties.

Although the INPI’s authority was limited, by law, to an analysis of the formal aspects and to the validity of the intellectual property rights that are involved in the recording/registration of contracts proceedings, the INPI established its own interpretation criteria without prior notice and continues to issue official requirements. This fact rendered the INPI’s registration proceeding to be slow and bureaucratic.

Thus, in order to improve the industrial property system in Brazil, as well as definitively limit INPI’s power to interfere in the agreements submitted to its registration, in 2017 Normative Instruction No. 70 was issued, effective since July 1st, 2017.

Since then, the Certificates of Recording/Registration have only reflected the value and term stated by the parties, with the contracting parties being responsible for the validity and legality of the agreement or invoice, as well as the payment remittances.

Subsequently, on July 7, 2017, INPI promulgated Resolution INPI/PR No. 199, which established the new guidelines for the examination of industrial property rights licensing agreements and registration of integrated circuit topography, technology transfer and franchise, recordable or registrable in the Institute.

In general terms, the Resolution indicated the rules, formalities and documents that should support the requirements of recordal or registration, detailing how the formal and technical examinations of the agreements will proceed. If the guidelines established by the Resolution are not observed, the recordal request may suffer formal and technical office actions, and may even result in the rejection and /or shelving of the request.

The new INPI/ PR 199/2017 Resolution complemented the Normative Instruction No. 70/2017, which limited INPI’s interference power and removed from its sphere of action the fiscal and exchange analysis of the contracts submitted to the recordal/ registration. In this sense, in all the Certificates, the following information note was added: “INPI did not examine the Agreement in light of tax and capital remittance legislation”.

In accordance with the new INPI rules, BACEN issued a Circular 3.857 / 2017, regulating the rite of sanction administrative procedure for the application of penalties, coercive measures and methods for the settlement of disputes. Therefore, irregular royalty payments are subject to the administrative sanctioning process.

In this sense, although the INPI no longer interferes with or make demands on the value and term of payment of agreements, it remains the responsibility of the contracting parties to respect the tax deductibility limits set forth in the Ministry of Finance Ordinance no. 436/58 that, in the case of agreements between companies with direct or indirect shareholdings, such limits should also correspond to those of remittance of payments abroad. Likewise, it must be observed the maximum period of 5 (five) years, extendable for a further five (5) years, of technology transfer agreements between related parties, based on article 12, paragraph 3 of Law no. 4.131/62.

In addition, according to Decision no. 9/2000 of the Federal Income Tax Office, the refusal of retroactive payments in technology transfer contracts remains. The retroaction is only allowed up to the date of the protocol of the application for registration of the contract in the INPI, in other words, the royalties can only be computed from this date, and remitted after the registration of the agreement with the Central Bank.

Lastly, added to this change, the process of registration became totally digital, and there is no longer the need to present the physical process of the agreement or any other documents, unless expressly requested by the INPI in demand.

Although the INPI is currently more rigorous regarding the formal aspects of the agreements, the flexibility in the analysis of the agreements meant a substantial reduction in the time of the recordal / registration process, since most of the Certificates were issued between 2 and 3 months – half of the time it took a few years ago.

Other Intellectual Property-related contracts

In addition to technology supply agreements, contracts that have as a subject matter the licensing of intellectual property rights must be recorded (registered) with the INPI. The following types of contracts may be recorded/registered with the INPI:

Patent License Agreements;

Trademark License Agreements;

Supply of Technological Know-How Agreements;

Technical and Scientific Assistance Agreements; and

Franchise Agreements (Law 8.955/94).

Pursuant to the recording/registration of the relevant contract with the INPI, its registration with the Central Bank (BACEN) is required to enable the foreign remittance of royalties, and also for the purpose of the tax deduction of these payments.

The tax deduction limits are established in the Treasury Department Ordinance no. 436/58, and range from 1% to 5% depending on the product involved. In the case of contracts between controlling and controlled companies, these deductibility limits shall be the same for the remittance of royalties, according to the INPI’s interpretation of article 50 of Law 8.383/91.

In the case of trademark licenses, the tax deductibility limit is 1% of the net sales revenues of the contractual products, provided that the use of the trademark does not pursue from the use of a patent, manufacturing process or formula (item II of Ordinance 436/58). Accordingly, the INPI does not allow the foreign remittance of royalties through a trademark license if there exists simultaneously a patent license and/or a technology supply agreement related to the same products.

The intellectual property rights-related agreements shall only be effective against third parties after they have been registered with the INPI. In addition to enabling the foreign remittance and tax deductibility of royalties, in the case of non-gratuitous contracts, the registration of these contracts generates the following effects:

a) Warranted exclusivity as to the right granted to the licensee, in the case of exclusive licenses; and

b) Legitimate the licensee to figure as a party in lawsuits related to trademarks and patents, severally or as a co-plaintiff or co-defendant along with the licensor, if the contract so allows.

It should be noted that, under the current law the registration of trademark or patent licenses is not a condition for the purposes of validating the use of a trademark or patent by a third party, provided that the owner proves that the user holds an authorization therefor.

Software Agreements

As regards software agreements, only the contracts for the supply of software program technology are required to be registered with the INPI in order to produce effects against third parties (article 11 of the Software Act – Law no. 9.609/98). In order to enable the remittance of royalties under this type of contract, its recording with the INPI and registration with the Central Bank (BACEN) are required.

The sole paragraph of article 11 of the Software Act provides that for the registration of a contract for the supply of software program technology the supplier must provide complete documentation to the party to which the technology is supplied, particularly the notes on the source code, description memorial, internal functional specifications, diagrams, flow charts and other technical data required to absorb the technology.

With regard to software licenses, they are not required to be submitted to the INPI’s scrutiny, and the remittances of the related royalties may be done directly through a commercial bank authorized by the Central Bank (BACEN) to perform such operation.


As to the taxation of technology transfer and other intellectual property related agreements between national and foreign companies, the following events of levy might apply: withholding tax (“IRF”) – 15%; economic domain intervention contribution (“CIDE”) – 10%, with possibility of credit on patent and trademark license agreements; service tax on the import of services (“ISS-Importação”) – maximum duty rate of 5%; Contribution for the Social Integration Programs on the import of foreign products or services (“PIS/PASEP-Importação”) – 1.65%; Contribution for the Financing of the Social Security System by Importers of Foreign Goods or Services from Abroad (“COFINS-Importação”) – 7.6%; Tax on Financial Operations (“IOF”) – 0.38%.

Constitutionality and effective application of some of the above taxes remain questionable, and might be subject to revision by the Brazilian Judiciary Power.

Author: Marina Inês Fuzita Karakanian

Dannemann Siemsen

Rua Marquês de Olinda, 70 – Botafogo
22251-040 Rio de Janeiro- RJ
Phone: +55 (21) 2237 8700
E-mail: [email protected]

Av. Indianópolis, 739 – Indianópolis
04063-000 São Paulo – SP
Phone: +55 (11) 2155 9500
E-mail: [email protected]



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