Taxation of Passive Income in OECD and UN Models
Comparative Analysis and Implications for the Current Brazilian Proposal for Dividend Taxation
DOI:
https://doi.org/10.46801/2595-7155.15.2.2025.2834Keywords:
International taxation, passive income, double taxation agreements, OECD Model, UN ModelAbstract
This paper examines the international tax treatment for passive income (dividends, interest, and royalties) in light of the OECD and UN Model Tax Conventions, based on the implications of Brazil’’ proposal to reintroduce dividend taxation. Based on a comparative analysis of Articles 10, 11, and 12 of both models, the study identifies philosophical and technical differences in the allocation of taxing power between source states and residence states. The research demonstrates how Brazil’s network of double taxation agreements – historically aligned with the UN Model – may face challenges in reconciling with the new domestic taxation proposal for dividends. Using a dogmatic methodology and case studies, it is argued that the Brazilian reform transcends the national sphere, reconfiguring the country’s negotiating position in future double taxation agreements and reflecting tensions between international harmonization and fiscal sovereignty. It concludes that realignment with OECD practices, while strategic for Brazil’s candidacy for the organization, should preserve tax protection instruments appropriate to the asymmetries of emerging economies.
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