Brazil Tax Appeals Council Rules on Interest Deductibility in Thin-Cap Case

Brazil's Administrative Council of Tax Appeals (Carf) ruled on a thin-capitalization dispute involving a multinational telecom infrastructure group, determining that interest paid to two Netherlands-based holding creditors lacked economic substance and thus fell under the 30% net-worth subcapitalization limit. The split decision clarifies application of economic substance doctrine in interest deductibility, potentially affecting cross-border financing structures.