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FATCA Vs. Brazilian Supreme Court (STF)

On August 24, 2015, Decree 8506/2015 was published, enacting the text of the International Agreement between USA and Brazil regarding the Improvement of Tax Compliance and International Implementation of FATCA, or "Foreign Account Tax Compliance Act". The International Agreement provides for the exchange of financial information and financial data between the two countries. However, the International Agreement was born with probable ‘unconstitutionality’. The Federal Supreme Court analyzing Article 5º, XII, from the Brazilian Constitution (on chapter of Constitutional Guarantees, item that protect privacy) had included the bank data as a privacy protection that only a Judge can authorize the removal of the data privacy. If either IRS or any Minister of State cannot obtain banking information without proper judicial authorization, for sure foreign authorities cannot too. The Brazilian taxpayers who had their right to data privacy, both national and international, can nullify any tax collection done based on information obtained against the Constitution. To think otherwise is to violate the Constitution in the current interpretation of art. 5, item XII, made by the Supreme Court. Thus, the international agreement about FATCA is historic, but would like Garrincha on the famous anecdote of our football (soccer), "lacked to only arrange with the Russians."

About the author

Marcus V. Buschmann

President for Latin America of Adam Global, Partner of Buschmann & Associados Advogados. For more than 15 years Mr. Buschmann is helping international clients to establish business and navigate in the Brazilian legal and economic scenario. Buschmann & Associados - Advogados e Consultores Av. Rio Branco, nº 177, 20º Andar, Centro Rio de Janeiro - RJ - Brasil - CEP: 20.040-007 Telefax: +55 21 2240-3936 Mobile: + 55 21 99115-4296