Alerts
- 1 July 2025
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IOF: Congress Blocks Rate Hikes, Prompting Government Appeal to the Supreme Court
On June 25, 2025, the Brazilian House of Representatives and the Federal Senate approved the Legislative Decree that suspended the effects of Decrees No. 12,466 of May 22, 2025; No. 12,467 of May 23, 2025; and No. 12,499 of June 11, 2025, which had increased the Tax on Financial Transactions (“IOF”) rates on certain operations.
Following approval by both legislative chambers, the measure was formalized through Legislative Decree No. 176 of 2025, published on June 27, 2025 (“LD 176”), restoring the original wording of Decree No. 6,306 of December 14, 2007, which regulates the IOF. Below, the tables summarize the IOF changes to date:
IOF-FX
| Outbound remittances | |||
| Type of transaction | May/2025 alterations | June/2025 alterations | After LD 176 (effective as of June 27) |
| Transactions not subject to specific regulations (such as services, royalties, etc.) | 3,50% | 3.5% | 0.38% |
| Repatriation of capital invested by a foreign investor in equity interests in Brazil | Dividends and interest on net equity (JCP) – 0%
Capital reductions and other transactions – 3.5% |
Dividends and interest on net equity (JCP) – 0%
Capital reductions and other transactions – 0% |
Dividends and interest on net equity (JCP) – 0%
Capital reductions and other transactions – 0.38% |
| Remittances related to transactions by payment instrument issuers involving purchases of goods and services and cash withdrawals abroad | 3.5% | 3.5% | 3.38% (reduced to zero until 2028) |
| Travel checks, prepaid cards | 3.5% | 3.5% | 3.38% (reduced to zero until 2028) |
| Funds made available abroad and purchase of foreign currency in cash | 3.5% | 3.5% | 1.1% |
| Outbound remittances for investment purposes | 1.1% | 1.1% | 1.1% |
| Specific operations subject to a zero tax rate or exemption | 0% or exemption | 0% or exemption | 0% or exemption |
IOF-credit
| Type of transaction | May/2025 alterations | June/2025 alterations | After LD 176 (effective as of June 27) |
| Loans between legal entities | Up to 3.95% | Up to 3.38% | Up to 1.88% |
| Advance payment to suppliers (with drawee’s risk and forfaiting structures) | Up to 3.95%*1 | Up to 3%*1 | Not subject to taxation |
| Simples Nacional regime (transactions of up to R$30,000.00) | Up to 1.95% | Up to 1.38% | Up to 0.88% |
| MEI (Brazilian Individual Microentrepreneur) – transactions not exceeding R$30,000.00 | Up to 1.38% | Up to 1.38% | Up to 0.88% |
| Cooperative-related transactions | The 0% rate applies exclusively to aggregate transactions below R$100 million | The 0% rate applies exclusively to aggregate transactions below R$100 million | 0% |
IOF-insurance
| Type of transaction | May/2025 alterations | June/2025 alterations | After LD 176 (effective as of June 27) |
| Life insurance plans with survival coverage become subject to taxation | 5% (above certain investment thresholds) | 5% (above certain investment thresholds), except for contributions made by employers | 0% |
However, the Office of the Attorney General (“AGU”) filed a legal action before the Federal Supreme Court (“STF”) seeking to declare the Legislative Branch’s enactment of LD 176 unconstitutional. In addition, on Friday, June 27, 2025, the Socialism and Liberty Party (“PSOL”) filed Direct Action for Unconstitutionality (“ADI”) No. 7,839 with the STF, requesting the suspension of the effects of LD 176 and its declaration of unconstitutionality.
Our Tax team is closely monitoring developments related to the IOF. For further information on this matter or other topics of interest, please contact one of our professionals.
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