It appears that withholding tax exposure on cross border lease rentals out of Brazil have been eliminated through legislative procedures.
Clarification was provided only recently when Normative Instruction 1664 was issued confirming that the 0% withholding tax rate may apply to payments made by Brazilian companies that are engaged in regular public air transport, even if the beneficiary is located in a low-tax jurisdiction.
As you are aware, Brazil added Ireland to its black list of countries on 14 September 2016 which could result in payments to Ireland being subject to withholding tax at 25%. The Brazilian commercial airline lobby group lobbied the Brazilian Government on this issue and Ireland has made an official appeal to reverse the decision.
There was an argument that withholding taxes would not have to be applied until 1 January 2017 and a Brazilian airline obtained an injunction in a state court confirming this view. Despite this, there was also an understanding by some that a general exemption from withholding tax still applied to lease payments made to Ireland by Brazilian public airlines until 31 December 2022. However, there was concern that this exemption did not apply to payments made to countries on the black list and we are aware that certain Brazilian banks (who can be held jointly liable for withholding taxes) were going to take a conservative approach and withhold 25% tax on lease payments to Ireland until the matter was recently clarified.
Find more information on this in the attachment from our Brazil office.