What is IOF in Brazil? A guide to getting it right


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.

One of the main places you’ll see IOF is if you’re carrying out any transaction that includes money being changed from one currency to another. Which means if you’re making international payments to or from Brazil, it pays to know the rates of IOF that can be applied. You can’t dodge IOF, but if you’re looking to make an international money transfer in or out of Brazil for personal use, you might be able to save by using Wise — we’ll cover that later.

For now — here’s all you need to know about IOF in Brazil.

What does IOF stand for?

IOF stands for Imposto sobre Operações Financeiras, and is usually translated as the Tax on Operations of Credit, Exchange and Insurance.

What is IOF in Brazil? What’s it used for?

IOF is a Brazilian tax applied on some financial transactions, including foreign exchange, loans, insurance, investments, and securities. It can be applied to some things like credit cards, but then not on other forms of credit like store cards, or purchases paid by interest-free installments. It can feel a bit overwhelming if you’re trying to pin down exactly where you do and do not pay it.

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.

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.

What are the Imposto sobre Operações Financeiras (IOF) tax brackets?

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%.

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 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%

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. With prices like that, it’s certainly worth doing your research to see how you might be affected.

When do you need to pay IOF in Brazil?

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.

How do I send money to Brazil?

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 Wise — this could be a better value option than a traditional bank, but more on that in a moment.

Check out the exchange rate and fees before you decide

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.

In fact, in Brazil you’ll often see exchange rates referenced as commercial, tourism, and parallel dollar rates. The equivalent to the mid-market rate, or the real exchange rate, is the commercial rate. Not something offered to consumers very often.

Wise offers safe and quick international money transfers with just a small upfront fee, and using that real exchange rate. Meaning you can potentially save a pretty penny, using Wise instead of a bank for your international money transfers. Sadly, it’s not possible to transfer money from Brazil to a business based abroad using Wise — but if you’re looking to make a personal payment, check out Wise to see if you can get a better deal.

Nobody wants to pay more than they have to, to send or receive money from abroad. IOF is unavoidable, but you can dodge high international money transfer fees if you choose the right service. Try Wise, and see what you’ll save compared to your regular bank.

Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

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