International Tax update for United Kingdom, United States, Norway, Brazil, Switzerland and Cambodia

At a glance

United Kingdom: VAT deduction on the management of investment funds

United States: Section 892 – Final Regulations and New Proposed Regulations

Norway: Highlights of 2026 state budget

Brazil: Senate approves bill on dividend WHT

Switzerland: Navigating the transition from FATCA Model 2 to Model 1 IGA

Cambodia: Capital gains tax implementation postponed until 1 January 2026

A closer look

VAT deduction on the management of investment funds

The UK VAT legislation grants an exemption for the management of certain recognised overseas collective investment schemes, provided they are ‘actively marketed’ in the United Kingdom. However, guidance explicitly restricts this exemption to funds recognised under Section 272 of the Financial Services and Markets Act 2000 (“FSMA”), with the management of all other overseas funds being taxable, irrespective of whether they are actively marketed to the UK retail market.

FSMA outlines four primary frameworks enabling the marketing of overseas funds to UK retail investors. This includes the Overseas Fund Regime (“OFR”), established under Sections 271A-271S FSMA and the Temporary Marketing Permissions Regime, which are now the main avenues for overseas funds to achieve recognition in the UK market, in place of the “active marketing” test in isolation.

Where reliance has been placed on the “active marketing” test to apply exemption, rather looking at the specific FSMA authorisations, there is opportunity to recover additional input tax for the past four years by reclassifying the management of non-s272 funds (which were historically more common, but now much rarer) as taxable.

Relevant funds should review the VAT position taken and consider whether remediation is needed.
 

US: Section 892 – Final Regulations and New Proposed Regulations

On Monday, December 15th, the long-awaited Section 892 regulations—previously in proposed form—were finalized with several modifications. In addition, Treasury released a new set of proposed Section 892 regulations which provide further guidance on key topics, including when the acquisition of debt constitutes commercial activity, as well as the definition of effective control. Please use the following link for a summary of these regulations.

This is an important US tax legislative development that may significantly affect Section 892 organisations in relation to their US investments and tax obligations.
 

Norway: Highlights of 2026 state budget

The Ministry of Finance (“MOF”) has presented the state budget for 2026, which includes proposed changes to the taxation of mutual funds. The ministry has also issued a consultation paper proposing changes as from 2027 to the rules governing the repayment of paid-in capital, of which the consultation is open until 15 January 2026.

The key developments for the investment management industry are as follows:

• Tax exemption for interest – Currently Norwegian mutual funds are largely exempt from tax on share income, but interest income is taxable. The proposed changes would introduce an exemption for Norwegian mutual funds on interest income and capital gains from the sale of interest-bearing securities.
• Mutual fund definition – The budget proposes changes to tighten the definition of a mutual fund in the Norwegian Tax Act (“NTA”). This may impact foreign funds currently qualifying as mutual funds for Norwegian tax purposes.
• Repayment of Paid-in Capital – The MOF has proposed two alternative solutions regarding how the tax exemption for the repayment of paid-in capital from LLCs might be calculated. The proposal is open for consultation until 15 January 2026, with changes proposed from 2027.

For further details, please see here.
 

Brazil: Senate approves bill on dividend WHT

In addition to Brazil's proposed dividend withholding tax, on 5 November 2025, the Brazilian Senate approved Bill No. 1,087/2025. The bill is now subject to the president’s assent for its conversion into law, which is expected to occur before 31 December 2025. Following this, the law would become effective as from 1 January 2026.

Of particular note to non-resident investors is that dividends paid to non-resident shareholders (both individuals and legal entities, but excluding certain foreign pensions, governmental entities, and sovereign wealth funds) would be subject to a 10% withholding tax regardless of the amount earned per month from the legal entity.

Dividends related to profits earned in calendar year 2025 would be exempt from taxation, provided their distribution is approved by 31 December 2025 and the dividends are enforceable under civil or corporate law, provided their payment, credit, use, or delivery occurs under the terms originally set forth in the act of approval.

Additionally, the bill allows for a tax credit for non-resident shareholders. Accordingly, if the effective corporate tax (IRPJ and CSLL) rates, along with the 10% withholding tax, exceed the nominal IRPJ and CSLL rates (generally 34% if the taxpayer is not a financial institution or similar entity), the excess may give rise to a tax credit for the non-resident shareholder. The bill states that the executive branch would further regulate the mechanisms of creditability and compliance.

For further details or to read the domestic considerations, please see the full Tax@Hand article here.
 

Switzerland: Navigating the transition from FATCA Model 2 to Model 1 IGA

From 1 January 2027, Switzerland will transition from the existing Foreign Account Tax Compliance Act (“FATCA”) Model 2 to a Model 1 Intergovernmental Agreement (“IGA”). This shift will introduce automatic and reciprocal exchange of information between the Swiss and US tax authorities, impacting clients with financial institutions (“FIs”) in Switzerland.

While this switch brings many simplifications for FIs, it also introduces new requirements, additional obligations, and transitional rules that need to be understood and correctly implemented by reporting Swiss FIs. Some of the key impacts include:

• With the entry in force of the new Model 1 IGA, reporting Swiss FIs will have to re-register with the IRS as “reporting Model 1 FIs.”
• Swiss FIs will now automatically exchange individual account details for all identified US reportable accounts, removing the previous distinction between consenting and non-consenting accounts.
• Swiss FIs will require and report US Tax Identification Numbers (“TINs”). Where these are not available for pre-existing US reportable accounts (accounts opened before 30 June 2014), for 2027 calendar year, Swiss FIs will be allowed to not include the US TIN. The relief is only available where the FI is compliance with IRS Notice 2024-78.
• Account holders and investors have a duty to inform any Swiss financial institution within 30 days of any changes in circumstance that affect validity of the FATCA self-certification.

Please see here for more details.
 

Cambodia: Capital gains tax implementation postponed until 1 January 2026

On 18 July 2025, the Cambodia Ministry of Economy and Finance (“MEF”) issued Prakas No. 496, establishing rules and procedures for the administration and collection of capital gains tax (“CGT") from:

• Resident individuals who realise capital gains from the sale or transfer of capital assets located both in Cambodia and abroad; and
• Non-resident individuals and legal entities realising capital gains from the sale or transfer of capital assets located in Cambodia.

The tax will apply to six categories of assets: immovable property, leases, investment property, goodwill, intellectual property, and foreign currency. The key points of Prakas No. 496 can be found here.

However, on 30 October 2025, the General Department of Taxation issued Notification No. 34236 to postpone the implementation of capital gains tax until 1 January 2026 (postponed from the original date of 1 September 2025). Read more here.