IOF: The Brazilian Tax on Financial Operations

featimg blog articles bpc partners Brazil-min


IOF stands for Imposto sobre Operações Financeiras, and is usually translated as the Tax on Operations of Credit, Exchange and Insurance. IOF is a tax on various types of financial transactions in Brazil — including foreign exchange, investments, and credit. It’s levied at a range of rates depending on exactly what kind of transaction is being carried out, and can change at short notice. IOF is intended to be a regulatory instrument — meaning that it helps the government measure and manage the volumes of credit and foreign exchange.

It’s also another revenue stream for the government. It’s worth knowing that IOF can be set by Presidential Decree and doesn’t have to be approved by the Brazilian National Congress. That means that it can change quite quickly, and in response to economic forces. For example, in March 2018, the IOF amount changed on several types of international money transfers. Previously, sending money from a Brazilian bank account to another bank account abroad in the same person’s name held an IOF tax of 0.38%. After March, the Brazilian government increased that tax to 1.1%. Likewise, during the Coronavirus crisis, the rate of IOF was 0% from April 3rd till July 3rd.


IOF is a tax levied on certain financial operations, such as loans, foreign exchange operations, insurance, and securities, as well as operations with gold (as a financial asset) and foreign exchange instruments. IOF is also applied on foreign exchange transactions, such as getting foreign cash for your planned holiday, or making a remittance payment from a bank account held in a different currency, to Brazil. Or even sending money from your bank account in Brazil to a bank account you hold in a different country and currency. It also applies to some things like credit cards, but then not on other forms of credit like store cards, or purchases paid by interest-free instalments.

It can feel a bit overwhelming if you’re trying to pin down exactly where you do and do not pay it.

IOF also applies to loan between legal entities and even to loans between legal entity and individual. In such case, the lender must pay the IOF on behalf of the recipient. IOF does not apply on monthly instalments when paying back a loan, nor on loans between individuals.

The IOF rate may be reduced to 0% in some cases, such as:

(i) exchange operations relating to the inflow of revenues in Brazil deriving from the export of goods and services (until July 2019 exporters had to receive the incoming payment within 24h of the export to avoid IOF, this is no longer a condition);

(ii) exchange operations relating to the inflow and outflow of resources in and from Brazil, stemming from foreign loans, with average term exceeding 180 days;

(iii) remittances of interest on net equity and dividends relating to foreign investment;

(iv) The simultaneous exchange transactions for the purposes of converting a foreign direct investment in a Brazilian company into investment in shares are also subject to a 0 percent rate.

IOF does not apply to the payment or reimbursement of Capital Social.

[kt_box opacity=”1″ background=”#f5f5f5″]

On 24 July 2019, the Brazilian tax authorities published a private letter ruling (PLR 231/2019) aligning their position with a recent opinion of the Office of Attorney General of the National Treasury (Opinion No. 83/2019) regarding the financial transactions tax (IOF) as applied to export transactions. The new ruling is a change in position from a previous private letter ruling (PLR 246/2018).

The tax authorities had previously held in PLR 246/2018 that if funds enter a Brazilian exporter’s bank account in Brazil after the exporter ships goods or provides services, the 0.38% IOF applies to the foreign exchange transaction.

The tax authorities have now reversed their position and recognize that export transactions should benefit from an IOF exemption on exported goods and services even if the funds were kept abroad for a period of time, provided the foreign exchange transaction satisfies the Brazilian Central Bank rules.

[/kt_box] [kt_box opacity=”1″ background=”#f5f5f5″]

On 13 August 2019, the Brazilian Supreme Chamber of Tax Appeals (CSRF) issued a decision concluding that the financial tax on credit transactions (IOF credit) should be applied on amounts made available between Brazilian related parties on a continuous basis, even if there are no formal loan agreements between the parties. This decision reverses the CSRF’s previous position where the court did not apply the IOF credit to cash pooling arrangements between related parties due to the nonexistence of formal loan agreements.



The applicable rate will vary depending on the operation. At the time of writing, the tax brackets you’ll likely need to know about if you’re thinking of sending money to, or receiving money from an account in Brazil are these:

  • Sending money from Brazil to a friend or relative abroad: 0.38%
  • Sending money from Brazil to an account abroad held in your own name: 1.1%
  • Sending money from abroad to Brazil to yourself, a friend, or a relative: 0.38%
  • Sending money from abroad to Brazil for a period of 180 days or less: 6,38%

There are also IOF taxes to pay on buying foreign currency, for example for your next planned trip abroad, or on prepaid and credit card use. If you’re using a Brazilian credit card but paying for something in a currency other than Brazilian real, the IOF can run as high as 6.38% and is charged directly to you, the consumer. Travelling with USD or Euros in the wallet is cheaper since you pay only 1,1% when changing Reais against foreign currencies.

Under current tax legislation, the IOF credit applies on domestic loans with pre-determined principal amounts at a maximum rate of 1.88% per year (0.38% upon grant, plus 0.0041% per day on the principal, limited to 1.5%, bringing the total to 1.88%). If the amount of the principal is not pre-determined at the time the loan is granted, the IOF credit of 0.38% is due upon grant, and the 0.0041% is collected at the end of each month based on the outstanding balance of that month (including interest).

If the loan is between a legal entity and an individual, the daily rate will be 0.0082%. This was decided in 2015 officially to limit the (see Decret 8.392/15 for more) level of indebtedness of individuals. With this rate, the maximum is 3.38% (as compared to 1.88% for legal entities). Many Brazilian who pay with credit card their purchases are paying this daily 0. 0.0082%, most of time without being aware about it.


For single transaction, i.e. a unique payment the calculation is straightforward and needs just the application of the rate to the amount of the payment.

On the other end, for loans, there is a trickier calculation since there is a rate per day.

See below an example of calculation:
Example: Loan of 1 year
Amount of principal: R$ 100.000,00
Time: 365 days
Rate: 0, 0041%

Calculation of  IOF:
R$ 100.000,00 (x) 365 (x) 0, 0041% = R$ 1496,50
Extra = 100.000,00 (x) 0,38% = R$ 380,00
Total of IOF = 1496,50 + 380,00 = R$ 1876,50


IOF is deducted at source. That means it’ll be taken by the bank, credit card company, or whatever institution processes the relevant transaction, as and when it applies. In a few circumstances, you’ll get a bill for and need to pay later. It’s not super common, but in the case of credit cards, for example, you may be charged for IOF taxes on your monthly statement.

For loans between legal entities or between legal entity and individual, the lender must pay the IOF on behalf of the recipient. For this it will issue a document of payment – named DARF – to pay this tax to the Receita Federal.

When it is not deducted at source, the deadline is quite tricky. First you need to split the month of the operation into 3 periods:

Dates   Ten days Period:
From 1st till 10th of each month: 1st ten days period
From 11th till 20th of each month: 1st ten days period
From 21st till end of the month: 1st ten days period

The deadline is the 3rd business day of the ten days period that follow the one of the operation.

For example, if an operation has been done on 5th of January, the IOF must be paid before end of 13th – assuming 11, 12 and 13th are business days.


The Brazilian currency Real is considered to be a restricted currency, which implies limitation to the tradability of this currency. Payments in Brazilian Reais cannot be sent outside of Brazil and international payment processors can therefore not legally collect payment from Brazil from abroad using the Brazilian currency. As a merchant, you can display an approximate price in the Brazilian currency using real time currency exchange information but the merchant cannot process the payment transaction using Reais.

If you want to send money to Brazil you have several options. If your intended recipient has a bank account, then you could make an international bank transfer with your regular bank, which can usually be done in person in a bank branch, though sometimes you may have an option to do it online or through the phone. You could also choose a specialist in international money transfers like a broker – ‘corretor de cambio’ in Portuguese.

When you’re deciding which service is best for you, you’ll need to check out both the stated fees as well as the exchange rates used. See what your chosen provider is offering, and compare it to the mid-market rate using an online currency converter to check if it’s fair.

The mid-market rate matters because it’s the only real exchange rate — the one banks use when they trade on global markets. However, many banks or money exchange services markup this rate to make sure they make a profit. This means you lose out.