06/08/2025
On July 16, 2025, Justice Alexandre de Moraes of the Brazilian Supreme Federal Court (STF) partially reinstated the validity of the Executive Decree that had raised the rates of Brazil’s Financial Transactions Tax (IOF), affirming most of the increases affecting credit, foreign-exchange and investment operations.
Under the decision, all the IOF rate hikes remain in force except for the imposition on forfait transactions. These are receivables factoring operations, which the court held do not qualify as credit under current law. The STF also clarified that the decree may not produce effects during the suspension period of June 27 to July 16, 2025, when Congress formally stayed its operation. Accordingly, no retroactive IOF will be charged for transactions in that interval.
Key Takeaways (in general terms):
- Credit Operations and Foreign Exchange: Most rate increases (covering cash loans, FX purchases, international card transactions and outward remittances) are now effective again.
- Corporate Borrowing: The higher IOF ceilings on general corporate credit and on micro- and small-enterprise lines (Brazil’s Simple National Tax Regime (Simples Nacional)) have been upheld.
- Private Pension (VGBL): Annual exemptions remain BRL 300,000 through 2025 and BRL 600,000 from 2026, with a 5% rate applied to contributions above those thresholds.
In short, the STF’s decision restores nearly all previously suspended IOF rate increases, with immediate effect.
Action Items for Counsel and Clients:
- Review contractual and operational structures to assess IOF exposure under the reinstated rates.
- Update tax-calculation systems to reflect current IOF regimes.
- Monitor any further deliberations at the STF.
Should you require guidance on compliance adjustments, system upgrades or potential dispute strategies, our law firm stands ready to assist.
Author: Tiago Zonta Guerreiro
