Brazil: Government changes Tax on Financial Operations (IOF) rules

27 May 2025    3 minute read

In brief

As of 23 May 2025, Decree No. 12.466, of 22 May 2025, which amends Decree No. 6.306, of 14 December 2007, the Regulation of the Tax on Credit, Exchange and Insurance Transactions – IOF, came into force.

The changes provide for an increase in tax rates on various transactions, summarized in the table below. 
 

Contents

More details

  Before After Observation
General credit operations (e.g., loans, discounts, advances, overdrafts, etc.) Entity borrower: 0.0041%. Entity borrower: 0.0082% per day. When the borrower is a Micro or Small Business (Simples Nacional), in an amount equal to or less than BRL 30,000.00, the rate is reduced to 0.00274%
Additional IOF rate on credit operations. Entity and individual borrowers: 0.38%

Entity borrowers: 0.95%

Individual and MEI borrowers: 0.38%

  
Zero tax rate on credit transactions involving a cooperative borrower.  

Limit on the overall amount, in the immediately preceding calendar year, of credit operations, as creditor and borrower, set at BRL 100,000,000.00

Includes central cooperatives, cooperative federations, cooperative confederations and other cooperative associations.

 Cooperatives that exceed the overall limit are subject to the IOF-Credit tax. 
Foreign exchange transactions (i) for payment resulting from the acquisition of goods and services abroad; (ii) for withdrawals abroad; as well as (iii) for the acquisition of foreign currency in traveler's checks and for loading an international prepaid card. 3,38% 3,50% Situation applicable to international credit and debit cards.
Foreign exchange operations for the entry of funds into the country, including through simultaneous operations, relating to foreign loans. 0%

3,50% - Minimum average term of up to 364 days.

0% - Minimum average term of 365 or more days.

  
Exchange transactions for the acquisition of foreign currency in kind (cash) 1,10% 3,50%  
Foreign exchange transactions for the transfer of funds abroad, to make them available to residents of the country, or their spouse, partner or relative, whether consanguineous or related. 1,10%

Non-investment purposes (e.g., Capital, property purchase, donation, etc.): 3.50%

For investment purposes: 1.10%

 The Government backed down on the initial increase that would be also applicable for investment purposes.
Other exchange transactions carried out for the (i) entry or (ii) transfer of resources abroad, not exempt or subject to specific rates. 0.38%

Entry: 0.38%

Exit: 3.50%

 General rule.
Contributions over BRL 50,000.00 (considering all plans) to cover the cost of life insurance plans with survivor coverage (e.g., VGBL.)   5% Levy on the entire amount and not just on what exceeds BRL 50,000;
As a rule, the collection must be made by the insurer or EAPC. If this is not possible due to the lack of information on contributions made to plans of other entities, the responsibility becomes the insured's.
Rule valid until December 2026.

 

In the following day, via the new Decree No. 12.467, the Federal Government backed down from increasing the rates on foreign exchange transactions, transfers to and from abroad, relating to investment funds in the international market, maintaining the zero rate previously in force.

The new rates are effective immediately, without the application of any rule of anteriority.

These new IOF rates run counter to the previously stated objective of aligning with OECD standards, as prior to these changes there was a scheduled gradual reduction of the IOF rates to 0% by 2029. Nonetheless, dividends and interest on net equity (JCP) distributed to foreign shareholders by Brazilian companies remain subject to a zero IOF rate.

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Trench Rossi Watanabe, Sao Paulo
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