Doing Business in Brazil

4.3. Technology


One of the areas of great interest in the intellectual property field is the subject of technology acquisition or licensing, as Brazil, being a developing country, is continuously receiving new technologies from abroad with the purpose of improving its economic capacity. It is through technology transfer agreements that the Brazilian and foreign parties negotiate and regulate these interests.

A brief history of Technology Transfer Agreements

The promotion of technology entry in Brazil was locally regulated in the beginning of the 1970s, when, through Law no. 5,648 of December 11, 1970, the Brazilian Patent and Trademark Office (INPI – Instituto Nacional da Propriedade Industrial) was created and appointed as the public agency responsible for intervening in technology transfer agreements, which are agreements related to industrial property rights (patent licenses, trademark licenses, industrial design licenses, etc.) and franchise, technology sully or specialized technical assistance agreements.

Consequently, on September 11, 1975, the newly created INPI enacted the Normative Act no. 15, adopting an extremely interventionist position in the technology transfer agreements, which ultimately cased the agreement registration process to be time lengthy, with official requirements that were issued by the INPI out of its self-established rules and interpretations.

In addition, technology transfer agreements could not be onerous when the parties were related, given that our Foreign Capital Law (Law no. 4,131 of September 3, 1962) prohibited the remittance of royalties from a subsidiary to its parent company abroad.

From the 1990s onwards, the deregulation of the Brazilian economy was initiated, thus allowing a progressive entry of new technologies originated abroad. With Law no. 8,383/91, by means of its article 50, it became possible to remit payments between a subsidiary and its parent company (controlled and controlling companies) under technology transfer agreements that had been executed and registered before the INPI and the Brazilian Central Bank – Bacen.

In the same decade, the rules related to the entry of technology in Brazil gradually become more flexible, with the advent of the Normative Act no. 120/93 and Law no. 9,279/96 (Brazilian Industrial Property law).

Article 211 of Law 9,279/96, interpreted in conjunction with tax, fiscal and foreign capital laws, resulted in the conclusion, still in force, that technology transfer agreements must be registered before the INPI for the following purposes: (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.

It is important to notice, in this sense, that even with the enactment of the new Industrial Property Law, the INPI continued to intervene in the autonomy of the parties during the registration processes of technology transfer agreements, making a prior assessment of the compliance of the agreement with Brazilian tax and foreign capital laws, and by establishing some specific contractual conditions that should be met by the parties, often to the detriment of what was stipulated by law.

The INPI, however, has gradually been adopting an increasingly less interventionist position in the analysis of technology transfer agreements. In this sense, with the objective of further modernize the industrial property system in Brazil, as well as to limit the Institute’s interference in the agreements submitted for registry, in 2017 the INPI issued the Normative Act no. 70, in force since July 1, 2017.

Through Normative Act no. 70/2017, the INPI indicated that it would no longer carry out the fiscal/tax assessment of technology transfer agreements submitted for registration; the Certificate of Registration / Certificate of Recordal have, since then, reflected only the value and term declared by the parties, with the contractors being responsible for the validity and legality of the agreement and the remittances made.

Subsequently, on July 7, 2017, INPI promulgated Resolution INPI/PR no. 199, which established new guidelines for the examination of technology transfer 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 Resolution complemented the Normative Act no. 70/2017, which limited INPI’s interference power and removed from its sphere of action the fiscal and tax analysis of agreements submitted to the recordal/ registration. In this sense, all the Certificates now contain the following note: “The INPI did not examine the Agreement in light of tax and foreign capital legislation”.

In accordance with the new INPI rules, BACEN issued the Circular no 3,857/2017, regulating the rite of sanction administrative procedures for the application of penalties, coercive measures and methods for the settlement of disputes. Therefore, irregular royalty payments are currently subject to this administrative sanctioning process.

In this sense, although the INPI no longer interferes with or issue office actions related to the value and term of technology transfer 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 which, in the case of agreements entered between companies directly or indirectly related, also correspond to the limits for the remittance of royalties abroad.

General Rules Applicable to Technology Transfer Agreements in Brazil

The following agreements may be submitted for registration / recordal before the INPI:

Patent License Agreements;

Industrial Design License Agreements;

Trademark License Agreements;

Patent, Industrial Design or Trademark Assignment Agreements;

Technology Supply Agreements (know-how);

Technical and Scientific Assistance Agreements;

Integrated Circuit Topography License Agreements; and

Franchise Agreements (Law no. 8,955/94).

As we have previously mentioned, technology transfer agreements can be recorded / registered before the INPI for the following purposes:

  1. To allow the remittance of royalties to a foreign party (as per article 3, combined with articles 1 and 3 of the Annex III of the Bacen Resolution no. 3,844/10), provided that the tax and Foreign Capital Law are observed;
  2. Allow the deductibility of those payments, as long as the tax legislation is observed; and
  3. To make the agreement effective against third parties.

Technology transfer agreements will only be effective against third parties after its registration before the INPI. The registration of these agreements has, in addition to the admissibility of remittance and tax deduction of royalties – for onerous agreements – 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.

For related parties, the remittance of royalties cannot exceed the deductibility limits provided for in the Foreign Capital Law and in the Ordinance no. 436/58 issued by the Ministry of Finance, which establishes the deductibility limits as being 1% to 5% of the net sales revenue of the contractual products, depending on the field of technology involved in the agreement.

For trademark license agreements, the deductibility limit is always 1% of the net sales revenue arising from the sale of contractual products, provided that the royalties of the licensed trademarks are due to a patent, process of manufacturing formula (item II of Ordinance no. 436/58 issued by the Ministry of Finance). In this sense, Fiscal authorities does not allow the remittance of royalties abroad for a trademark license if there is a concurrent patent license or a technology supply agreement related to the same contractual products.

Based on article 12, §3 of Law no. 4,131/62, for technical and scientific assistance and technology supply agreements the deductibility and remittance limits also mean that the agreement cannot have a term longer than five years, counted from the introduction of a special production process, renewable for another period of five years provided that the need to renew the technological link is justified.

In addition, pursuant to the Decision no. 9 of June 28, 2000 issued by the Federal Revenue Secretary, retroactive payments are not allowed for technology transfer agreements. The royalties can be accrued from the filing date of the agreement for registration/recordal before the INPI, and they can be remitted after the issuance of the Certificate of Registration / Certificate of Recordal and registry of the agreement before the Bacen.

Finally, in addition to all those modifications, the registration process now is completely digital, and there is no longer need to present a physical copy of the agreement, as well as any other documents, unless expressly requested by the INPI.

Although currently the INPI is more strict about the formal aspects of the agreement, the recent flexibilization in the analysis of the agreement’s terms and conditions resulted in a substantial reduction time for the registration / recordal process, since most of the Certificates are now issued between two to three months – half the time it took a few years ago.

Technology Supply Agreements

In Brazil, the Industrial Property Law did not brought any specific definition or criteria aimed at the protection and defense of non-patented technologies, except for the responsibility for the improper use of confidential knowledge, information or data usable in industry, commerce or services, that were framed in unfair competition crimes.

In this sense, INPI has adopted the understanding that knowledge and techniques that are not supported by intellectual property rights (the know-how) cannot be proprietary and, therefore, cannot be subject to licensing, and their contracts must be established as the acquisition or mere dissemination of knowledge.

Traditionally, technology supply contracts are defined in Brazil as any type of transaction where one of the parties transfers to the other technical knowledge used in the manufacture of a product or service, provided that such transfer has not been carried out mainly through the rendering of technical services.

In this sense, what helps to characterize technology supply contracts are the delivery of technical documents, such as manuals, guides or drawings, and the remuneration, which, in these cases, is calculated based on a royalty rate on the net sale of the products or services developed with the transferred technology.

For related parties, any payments for technology supply must respect the limits of tax deduction established in Ordinance no. 436/58 of the Ministry of Finance and the Foreign Capital Law, so that royalties cannot exceed the ceiling of 1% to 5% % of net sales revenue from contractual products or services.

Also based on the Foreign Capital Law, when the parties are related then the technology supply agreements cannot have a term longer than five (5) years. This term, however, can be extended for a second period of five (5) years upon approval of the renewal at INPI and Bacen.

Finally, as previously explained, the Decision no. 9/2000 of the Federal Revenue Service established that royalties for technology supply agreements can only be accrued from the filing date of the agreement for registration before the INPI. Payments prior to that date cannot be accrued, regardless of what is agreed between the parties.

Software Agreements

Regarding software agreements, only contracts providing for technology transfer must be submitted for registration before the INPI; in other words, the software agreement must establish the acquisition or assignment of all documents related to the software, particularly the notes on the source code, description memorial, internal functional specifications, diagrams, flow charts and other technical data required to absorb the technology, in order to produce effects against third parties (article 11 of the Software Act – Law no. 9.609/98). The remittance of royalties under this type of agreement is subject to its registration before the INPI and Bacen.

Software licenses 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 agreements between national and foreign companies, the following taxes 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]



Patents, trademarks, designs, technology transfer, licensing, franchising, software, trade names, unfair competition.