Tax

Federal Government announces changes to the IOF

On May 22 and 23, 2025, respectively, Decrees No. 12,466/25 and 12,467/25 were published, introducing amendments to the Tax on Financial Transactions (IOF) applicable to insurance, credit, and foreign exchange operations.

Justification: According to the Ministry of Finance, the aim of issuing Decree No. 12,466/25 is to promote the harmonization of fiscal policy with monetary policy, seeking to contain inflation to the 3% target. In addition, the changes in each sector have specific objectives:

IOF Insurance: To correct alleged tax distortions in the use of VGBLs;
IOF Credit: Standardization of rates and search for tax neutrality and fiscal justice;
IOF Exchange Rate: Standardization of rates and reduction of exchange rate volatility.

However, due to the strong reaction of the financial market to the changes in the taxation of remittances abroad, Decree 12.467/25 was issued, amending the provisions of Decree 12.466/25 on IOF Exchange. Below are the main changes brought about by both decrees.

IOF Insurance

Life insurance plan with survival cover:

As it was: Zero rate.
How it will be: Monthly contributions of up to R$50,000: zero rate; Monthly contributions of more than R$50,000: 5% rate.
Comments: The measure seeks to discourage the use of life insurance with a survival clause (such as the VGBL) by high-income earners by taxing only plans with monthly contributions of more than R$50,000.

IOF Credit – Changes

Credit for legal entities

As it was: 0.38% fixed on contract + 0.0041% per day = 1.88% per year (ceiling)
How it will be: 0.95% fixed on contract + 0.0082% per day = 3.95% per year (ceiling)
Comments: The IOF rate for credit operations carried out by legal entities will now be the same as that applied to individuals.

Credit for Simples Nacional companies

As it was: 0.38% fixed on contract + 0.00137% per day = 0.88% per year (ceiling)
How it will be: 0.95% fixed on signing + 0.00274% per day = 1.95% per year (ceiling)
Comments: The measure sought to adjust the fixed rate to maintain the proportion with the rate applied to credit operations with other legal entities.

Borrower cooperative – global value of operation above R$ 100 million/year

As it was: zero rate
How it will be: the tax rate will now follow the rule imposed on companies in general
Comments: Cooperatives with a volume of operations of less than R$100 million/year will continue to be subject to a zero IOF rate on their operations.

Financing operations and advance payments to suppliers – “forfait” or “drawn risk”

As it was: the operation was not expressly mentioned as a credit operation
How it will be: the operation will now be expressly mentioned and will follow the general rule for credit operations, as of June 1, 2025.
Comments: A scenario of insecurity in the taxation and structuring of this operation is over, putting an end to the practice of structuring it as a credit assignment in order to avoid the IOF.

IOF Credit – Exemption / Zero Rate

The following credit operations remain exempt or zero-rated:

Rural credit
Exports and export credit notes
Job and income generation programs
Privatization Program
Financial institution covering debit balance in another
Credit for housing and basic sanitation
Infrastructure in federal government concessions
Advances on checks on deposit
Transactions with securities for goods deposited for export
FIES
Advancing salary to employees
Transfer of the object of a fiduciary sale
Export exchange advance
Early repayment of undue IOF
Transactions between financial institutions

IOF Exchange – Changes

International credit, debit and prepaid cards and traveler’s checks for personal expenses

As it was: Rate of 4.38%, introduced in 2024. In 2023, it was 5.38%, and in 2022, it was 6.38%.
How it will be: 3.5% tax rate.
Comments: Standardization of rates, but with a reduction in the tax burden, without a return to the 6.38% percentage that was envisaged in 2022.

Buying currency in cash

As it was: 1.1% tax rate.
As it will be: 3.5% tax rate.
Comments: In addition to standardizing the tax rate, the intention is to give equal treatment between the purchase of cash and transactions using cards and checks.

Short-term external loans

As it was: Zero rate from 2023.
How it will be: Rate of 3.5%, on transactions with a minimum average term of up to 364 days.
Comments: The increase in the rate for this type of operation aims to discourage foreign loans with a term of less than one year, but does not return to the 6% rate previously instituted in 2022.

Unspecified operations

As it was: Standard rate of 0.38% for inflows and outflows of funds abroad.
How it will be: Rate of 0.38% for inflows and 5% for outflows.
Comments: Maintains the reduction for inflows, but applies the 3.5% rate adopted for foreign loans.

IOF Exchange – Changes to Decree 12.467/25

Remittance of funds to a Brazilian taxpayer’s account abroad

As it was: 1.1% tax rate.
How it will be: If the resource is made available to a resident in the country without the purpose of investment or to a spouse, partner, consanguineous or related: rate of 3.5%; If the resource is made available to a resident in the country with the purpose of investment: 1.1%.
Comments: The measure was initially to increase the rate so that all remittance transactions would be taxed at 3.5%, but with the negative reaction of the market, the Ministry of Finance announced the change in rates through Decree No. 12,467/25.

Transfers relating to investments of funds abroad

As it was: Zero rate since 2014.
How it will stay: Despite the provision for a 3.5% rate in Decree No. 12,466/25, the operation will remain at a zero rate with the issue of Decree No. 12,467/25.
Comments: The measure was also due to the market’s reaction following the publication of Decree No. 12.465/25.