With the increase in IOF, traveling and spending abroad becomes more expensive

The federal government announced this Thursday (22) changes in the collection of the Tax on Financial Transactions (IOF) that affect operations with foreign currency. The rate was set at 3.5% for different types of transactions, including the use of cards abroad and the purchase of currency in international accounts.

According to the decree, anyone who makes purchases abroad with an international credit or debit card, prepaid card or traveler's checks will pay 3.5% IOF. The rate in effect since January was 3.38%.

The same rate will be applied to the purchase of foreign currency in international accounts, which was previously taxed at 1.1%.

With a fixed rate of 3.5%, the new decree revokes the changes implemented in the government of former president Jair Bolsonaro, which provided for the staggered reduction of IOF on foreign exchange transactions until its total elimination in 2029.

The measure is part of the government's effort to comply with the fiscal rule and, according to estimates by the economic team, has the potential to raise R$61 billion in two years: R$20 billion in 2025 and R$41 billion in 2026.

Corporate credit operations

The IOF was also changed for credit operations carried out by companies. The total rate went from up to 1.88% per year to up to 3.95%. In the case of companies under the Simples Nacional, the rate went from 0.88% to up to 1.95% per year.

In VGBL pension plans, monthly contributions of up to R$50,000 remain exempt. Above this amount, a 5% rate will apply.

The changes do not apply to personal loans for individuals, student loans (such as Fies), housing financing and financing via Finame for the acquisition of machinery and equipment by companies.

In the case of exchange rates, there will also be no changes in operations such as sending dividend remittances abroad, or in the use of credit cards by foreign tourists.

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