EU Companies Hiring Brazilian Vendors: VAT and Withholding Tax Explained

Any European company hiring a Brazilian vendor runs into two questions: do we pay VAT, and do we have to withhold tax? Short answer: no VAT anywhere in the European Union when the client is a business, and withholding depends on the tax treaty between Brazil and the client's country. Below is a country-by-country breakdown of where the rules mirror Spain's and what the withholding cap is.

Key takeaways

• VAT: services billed by a non-EU company to an EU company carry zero VAT in all 27 member states. The client self-assesses it (reverse charge). That's EU law, not a treaty benefit.
• Withholding: 12 EU countries treat technical services from Brazil as royalties, just like Spain. With a Brazilian tax residency certificate, withholding is capped at 10% or 15%, depending on the country.
• Austria, Finland, and France: have a treaty, but services aren't royalties there. Under the treaty, nothing is withheld on the service.
• Germany, Ireland, and 10 others: no treaty in force. Local law applies.

1. VAT: why the invoice is VAT-free across the EU

When a business based outside the EU provides services to a business based in the EU (B2B), the place of supply is the customer's country, and the customer, not the vendor, accounts for VAT. That rule comes from Directive 2006/112/EC, Articles 44 and 196, and it applies the same way in all 27 member states. In practice:

• the invoice shows no VAT and includes the note "Reverse charge – Article 196, Directive 2006/112/EC";
• the client provides its VAT ID, which you can verify on VIES;
• the client reports the VAT as both payable and deductible on its own return, so the net cash impact is usually zero.

This covers businesses and professionals. Consumer (B2C) sales follow different rules and require OSS registration. Agathas doesn't sell to EU consumers.

2. Withholding tax: what the Brazil treaty changes

The second question is about income tax withheld at source, which is where double tax treaties come in. Under the OECD model, a service with no transfer of rights is taxed only where the provider is based. Brazil, however, wrote a clause into the Protocol of nearly every treaty it signed that treats technical services and technical assistance as royalties (Article 12). So the client's country can withhold, but only up to the treaty cap, and only if the vendor proves it is a Brazilian tax resident.

Take Spain: the non-resident withholding rate is 24% without a certificate. With a tax residency certificate from Brazil's Federal Revenue Service, it drops to 15% at most. This isn't VAT, and it isn't the IRPF withholding Spanish freelancers deal with. It's the vendor's income tax, which the client pays to the tax office on the vendor's behalf.

For invoicing and payment details, see our EU client guide.

3. The 12 EU countries that follow Spain's approach

We reviewed each treaty text as published by Brazil (the official list is on the Federal Revenue Service treaty page):

Client's country	Treaty provision	Withholding cap
Belgium	Protocol, point 6 (2002 Additional Convention)	10%
Czech Republic	Protocol, point 3	15%
Denmark	Protocol, point 3	15%*
Hungary	Protocol, point 6	15%
Italy	Protocol, point 5	15%
Luxembourg	Protocol, point 4	15%
Netherlands	Protocol, point 5	15%
Poland	Art. 13 (stand-alone article, from Jan 1, 2026)	10%
Portugal	Protocol, point 5	15%
Slovakia	Protocol, point 3	15%
Spain	Protocol, point 5	15%
Sweden	2019 Protocol, point 5 (payments from Jan 1, 2026)	10%

* In Denmark, the 15% cap doesn't apply if the recipient owns 50% or more of the payer's voting stock, which won't be the case in a typical client-vendor relationship. Italy, the Netherlands, Luxembourg, Hungary, and the Czech Republic/Slovakia had a similar clause, but it was temporary and has expired.

A few things stand out. Belgium has its own 10% cap on technical assistance, in place since the 2002 Additional Convention. Sweden started treating technical services as royalties under its 2019 Protocol, effective for payments made on or after January 1, 2026, with a 10% cap. Poland's treaty, in effect since 2026, has a dedicated technical services article, also at 10%.

4. Treaty countries with no withholding on services

Austria, Finland, and France have treaties with Brazil, but their Protocols don't treat technical services as royalties. The service falls under Article 7 (business profits): without a permanent establishment in the client's country, only Brazil can tax it. Under the treaty, the client withholds nothing.

5. EU countries with no Brazil tax treaty

Germany (its treaty ended in 2006), Ireland, Greece, Bulgaria, Croatia, Cyprus, Slovenia, Estonia, Latvia, Lithuania, Malta, and Romania. With no treaty cap, the client country's local law applies. Many of these countries don't withhold on services performed abroad, but check each case with the client's tax advisor.

6. Checklist

1. Confirm the client is a business and get its VAT ID (VIES).
2. Issue the invoice without VAT, with the reverse charge note.
3. Send the tax residency certificate before the first payment; it's valid for one year.
4. Spell out in the contract whether the price is gross (withholding comes out of it) or net (the client adds it on top).
5. Pay by SEPA transfer in euros, to an account in the company's name.

How Agathas makes this easy

We work with companies in Spain, Portugal, and the rest of Europe under a written contract, with euro invoicing and the tax paperwork ready to go: residency certificate, a correctly worded invoice, and guidance for your accountant. If you're evaluating a software, website, or automation project with a Brazilian team, talk to our technology consulting team.

On the first call, we'll show you what the project costs after taxes in your country. Schedule an assessment.

For informational purposes only. Updated November 2026 based on the official treaty texts. Not a substitute for advice from your own tax advisor.