On May 22, 2025, the Federal Government enacted a fiscal package introducing significant changes to the taxation of financial transactions (IOF – Tax on Financial Operations) carried out by individuals. The new rules affect private pension investments, international card purchases, and cross-border remittances. These provisions take effect immediately and are not subject to the 90-day waiting period (anterioridade nonagesimal), as the IOF is considered a regulatory tax.
- Private Pension Investments (VGBL)
- A new IOF rate of 5% applies to the total amount of new contributions to Vida Gerador de Benefício Livre (VGBL) pension plans when monthly investments exceed BRL 50,000 per CPF, even if spread across multiple insurance companies.
- Important Notes:
- The tax applies only to the portion exceeding BRL 50,000 within the same calendar month.
- The existing balance is not affected by the new rule.
- Contributions below the threshold remain tax-exempt.
Tip: Continue to use private pension plans as a long-term savings tool, but structure your monthly contributions to avoid triggering the new tax burden.
- International Card Purchases and Foreign Exchange Transactions
The IOF rate has been standardized at 3.5% for the following operations:
- International purchases made using credit, debit, or prepaid cards;
- Purchase of foreign currency in cash or ATM withdrawals abroad;
- Cross-border remittances, including transfers to personal accounts held with foreign banks (offshore banking);
- Short-term external loans.
- Remittances and Inbound Transfers
- Remittances from international investment accounts: IOF rate increased from 0.38% to 1.1%;
- Inbound transfers from abroad to Brazil remain subject to IOF at the rate of 0.38%.
- Maintained Exemptions
The following transactions remain exempt from IOF:
- Import and export of goods and services;
- Remittance of profits and dividends to foreign investors;
- Inflow and outflow of foreign capital, such as direct investment operations.
Practical Impact
For consumers, these measures increase the cost of international card use and remittances abroad, and require more strategic planning for private pension investments.
The government’s objective is to boost tax revenues and demonstrate commitment to fiscal responsibility. However, these changes have immediate consequences on the personal budgets of individuals engaged in international consumption or investment.
Final Recommendations
- Review your international spending habits, taking into account the new IOF costs;
- Stagger your private pension contributions, especially if planning large investments;
- Assess alternative methods for transferring funds abroad, particularly if you make regular transfers or maintain accounts with foreign financial institutions.