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Tax Considerations relating to Real Estate Investment in Brazil

Tax Considerations relating to Real Estate Investment in Brazil. Presented by Ivan Tauil Senior Partner / Dallas-TX Thompson & Knight LLP March 5, 2008. Summary. Comparative Charts – FFI, FIP and SPE International Planning for Investments in Brazil.

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Tax Considerations relating to Real Estate Investment in Brazil

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  1. Tax Considerations relating to Real Estate Investment in Brazil Presented by Ivan Tauil Senior Partner / Dallas-TX Thompson & Knight LLP March 5, 2008

  2. Summary • Comparative Charts – FFI, FIP and SPE • International Planning for Investments in Brazil

  3. 1 – Chart 5 (FII vs. FIP vs. SPE)– General Aspects

  4. 1– Chart 6 (FII vs. FIP vs. SPE)– General Aspects

  5. 1 – Chart 7 (FII vs. FIP vs. SPE)– Fund Taxation

  6. 1 – Chart 8 (FII vs. FIP vs. SPE)– Taxation of Investors

  7. 2 – Chart 9 - Investment Structure- Brazilian Subsidiary • International Investment “Pure Equity” Foreign Investor Abroad Brazil • ForeignCo raise funds for BrazilCo to develop Project No. 01 • Project No. 01 produces results = R$ 100 • BrazilCo pays R$ 34 for IR and CSLL • BrazilCo pays dividends of R$ 66 • Total Taxation of ForeignCo = 34% Subsidiary BrazilCo Project No. 01 BrazilCo

  8. 2 – Chart 10 - Investment Structure- Brazilian Subsidiary • International Investment “Debt + Equity” Foreign Investor Abroad Brazil • ForeignColends resources to BrazilCo for development of Project No. 01 • BrazilCo pays R$ 15 in interest toForeingCo, which receives net R$ 12.75,after payment of 15% IRRF • Project No. 01 produces results = R$ 85 • BrazilCo pay dividends of R$ 56.01 • Total Taxation for ForeignCo = 31.15% • Save = 2.85% Subsidiary BrazilCo Project No. 01 BrazilCo

  9. 2 – Chart 11 - Investment Structure- SPE • “Debt + Equity” in SPE with Local Company Foreign Investor Loan Abroad Brazil Subsidiary BrazilCo ABC Incorporation Corporate Interests in SPE Project A SPE Project B ABC Incorporation

  10. 2 – Chart 12 - Investment Structure– SCP • “Debt + Equity” in SCP Local Incorporation Foreign Investor Loan Abroad Brazil Subsidiary BrazilCo ABC Incorporation Project B ABC Incorporation Project A SPC Limited Partnership

  11. 2 – Chart 13 - Investment Structure- Foreign SPE Foreign Investor Owner Country 02 Foreign Investor Country 01 – LTJ Loan Subsidiary BrazilCo ABC Incorporation Brazil Project B ABC Incorporation Project A SPE Limited Partnership

  12. 2 – Chart 14 - Investment Structure- F.I.O. sells F.I. to buyer Foreign Investor Owner Buyer Country 02 Foreign Investor Country 01 – LTJ Loan Subsidiary BrazilCo Brazil ABC Incorporation Project B ABC Incorporation Project A – SPE Limited Partnership

  13. THANK YOU! Ivan Tauil Tauil, Chequer e Mello Advogados Senior Partner – Thomson & Knight LLP – Dallas / TX Rua do Carmo nº. 43, 8º e 9º andares Centro – Rio de Janeiro – RJ + 55 21 2271 4210

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