Brazil's IOF Tax on Foreign Exchange for Companies

A US company paying a supplier in São Paulo, or one collecting from a client in Rio de Janeiro, notices that the amount that lands rarely matches the quoted rate. Part of the gap is the institution's spread, but another part is IOF, a federal tax whose rate depends on the declared purpose of the transaction, and one that changed level three times in 2025 alone.

At Soulbit Academy we already covered how foreign exchange works for companies operating with Brazil, the câmbio contract, Law 14,286/2021 and the total cost of a transaction, in foreign exchange for companies in Brazil. This article goes deeper into IOF specifically, from the perspective of a company outside Brazil: the taxable event, who is responsible for collecting it, the confirmed rates by purpose, and how the tax hits three concrete cases, paying a supplier, collecting for an exported service, and international payroll.

What Brazil's IOF tax on foreign exchange is and who owes it

IOF on foreign exchange is the federal tax that applies to the settlement of every purchase or sale of foreign currency handled by an institution authorized by Brazil's central bank, regulated by Decree 6,306 of 14 December 2007.

Article 11 of the decree defines the taxable event: the delivery of national or foreign currency, or of a document representing it, or making it available to the interested party, at the moment the foreign exchange transaction settles. It is not the signing of the contract that triggers the tax; it is the moment the exchange settles and value changes hands.

Article 12 sets out who is the taxpayer: buyers or sellers of foreign currency in transactions involving financial transfers to or from abroad, on the Brazilian side of the transaction. A Brazilian company paying a foreign supplier is the buyer of foreign currency; one collecting from a client abroad is the seller of that currency when the exchange settles.

Article 13 sets out who is responsible for collecting the tax: institutions authorized to operate in foreign exchange, a bank, a foreign exchange broker or, within limits set by Brazil's National Monetary Council, a payment institution. In practice, neither your company nor the Brazilian counterparty pays IOF directly to Brazil's federal tax authority; the Brazilian-side institution calculates it, withholds it and remits it to the National Treasury when each contract closes.

Does a foreign company pay IOF directly, or does the Brazilian counterparty always withhold it?

The Brazilian counterparty's institution always withholds it. The formal taxpayer is whoever buys or sells the currency on the Brazilian side, so a company abroad receives or pays the net amount, already adjusted for IOF, without handling the tax directly with Brazil's federal tax authority.

How much IOF costs by transaction purpose

Brazil's IOF rate on foreign exchange runs from 1.10 percent to 3.5 percent depending on the declared purpose, under Decree 6,306/2007 as amended by Decree 12,499 of 11 June 2025, which rewrote much of article 15-B of the original decree.

Three rates are clear in the text of article 15-B. For a transfer for investment purposes abroad, item XXI-A sets 1.10 percent. For cash, foreign currency in physical form, item XX sets 3.5 percent. For loading a prepaid international card, item X also sets 3.5 percent. For funds held available abroad, the general transfer category that does not fit any of those, item XXI sets 3.5 percent.

The decree sets no separate rate for paying a contracted service in Brazil or for sending international payroll. Those transfers, when they do not qualify as investment, tend to fall into the same general group under item XXI. Registered foreign trade transactions, such as goods imports and exports formally registered in Brazil's foreign trade system, follow their own code inside the same decree, with treatment historically distinct from the general transfer table; the exact code varies by the nature of the transaction and should be confirmed with the institution before closing the exchange.

Transaction purpose	IOF rate	Legal basis
Transfer for investment purposes abroad	1.10%	Art. 15-B, XXI-A, Decree 6,306/2007, amended by Decree 12,499/2025
Cash (foreign currency in physical form)	3.5%	Art. 15-B, XX, same legal basis
Loading a prepaid international card	3.5%	Art. 15-B, X, same legal basis
Funds held available abroad and general transfers (in practice covers service payments and international payroll)	3.5%	Art. 15-B, XXI, same legal basis
Registered goods imports and exports under Brazil's foreign trade system	Own code, historically outside the general table	Same decree; confirm the code with the institution

Does an investment transfer pay the same IOF rate as a payment to a supplier?

No. The rate depends on the transaction code the institution registers for that specific transfer, not on who the client is or the amount involved. The same Brazilian counterparty can pay 1.10 percent on an investment transfer and 3.5 percent on a payment to a supplier, on the same day.

Paying a Brazilian supplier: how IOF applies

Paying a Brazilian supplier for a contracted service tends to trigger the IOF rate for the general transfer group, currently 3.5 percent, because the decree did not create a separate, lower rate for that purpose. That changes when the payment is tied to a registered goods import, which follows a foreign trade code inside the same decree.

In practice, this means a company that hires a freelance developer in Brazil pays a different IOF than one importing industrial parts from Brazil under a formal import registration. The authorized institution on the Brazilian side classifies the transaction and applies the corresponding code; a worked example of paying Brazilian service providers appears in paying international contractors in USDC from Brazil.

Does splitting a large payment into several transfers lower the IOF rate?

No. Each transfer is a separate settlement, with its own taxable event and its own IOF charge. Splitting a large payment into smaller transfers does not lower the rate; it only multiplies the number of transactions subject to the tax.

Collecting for an exported service: what changes on the inflow side

Collecting a payment from abroad for a service the Brazilian counterparty exported is an inflow transaction, with different foreign exchange treatment from an outbound transfer. Decree 6,306/2007 treats inflows and outflows as separate flows, each with its own set of transaction codes.

That matters because the rate on an outbound transfer is not the same as an equivalent inflow. If your company pays a Brazilian consultancy for a delivered project, that consultancy should not assume it pays the same IOF it would pay sending that amount abroad. The transaction code the Brazilian institution declares determines the applicable rate, and depends on how the transaction is characterized, an exported service, a return of capital, or another purpose. The safe path is confirming the code and the rate before closing each transaction, rather than assuming it mirrors the outbound table.

IOF and international payroll with Brazil

IOF on international payroll with Brazil applies the general 3.5 percent rate under article 15-B, because the decree sets no separate rate for salaries or fees sent to or from Brazil.

This cuts both ways: a foreign company paying a Brazilian contractor directly does not itself go through Brazil's foreign exchange market, but if payment routes through an account or institution inside Brazil, the Brazilian side of that transaction does trigger the IOF taxable event. The comparative cost of paying international payroll through a traditional banking channel is covered in the true cost of international payroll by bank transfer.

Is there an IOF exemption for payroll payments in Brazil below a minimum amount?

No. Nothing in Decree 6,306/2007 as amended by Decree 12,499/2025 ties an IOF exemption to the size of a payroll transfer. The applicable rate is the same general transfer rate, regardless of whether the amount is large or small.

Why IOF changed level three times in 2025

Brazil's IOF on foreign exchange changed level three times in 2025 alone: raised by decree in June, suspended by the National Congress days later, and reinstated by the Supreme Federal Court in July, a history that explains why any rate quoted needs a date attached to it.

Decree 12,499/2025, published on 11 June 2025, raised the foreign exchange rates in force today. Weeks later, the National Congress voted to suspend part of the changes, temporarily restoring the decree's earlier wording. On 16 July 2025, Justice Alexandre de Moraes of the Supreme Federal Court reinstated the effects of Decree 12,499/2025, with the exception of rules on so called "risco sacado" forfaiting transactions, which do not affect the ordinary foreign exchange a company uses to pay suppliers or payroll. Agência Brasil, Brazil's public news agency, summarized that decision at the time.

That history is why the rates in this article carry the date August 2026: a decree can be suspended or reinstated within a few weeks. Always confirm the rate in force with the authorized institution, not with an article published months earlier.

What Soulbit's V1 does and does not do about Brazil's IOF

Soulbit's V1 does not collect or reduce Brazil's IOF: that tax is charged by the authorized institution that settles the foreign exchange transaction inside Brazil, a step that sits outside the platform. Holding a stablecoin balance does not replace that charge once the value is converted into reais.

What V1 offers is a balance in stablecoins, USDC and USDT, and in fiat, US dollar, euro and pound, converted through an OTC quote requested on demand, after KYB verification. That balance moves the international leg of a transaction, between your company and the Brazilian counterparty, without depending on correspondent banks, a comparison detailed in SWIFT versus stablecoin for international payments. But when that balance needs to become reais inside Brazil's financial system, the conversion still runs through an authorized institution, outside Soulbit, and IOF applies at that moment like any other foreign exchange transaction.

Component	Traditional foreign exchange (bank or broker)	Stablecoin balance with OTC conversion (Soulbit V1)
Subject to IOF on foreign exchange in Brazil	Yes, always, when each contract closes	Yes, at the moment the balance is converted into reais by an authorized institution; Soulbit does not collect or reduce that tax
Requires a formal câmbio contract	Yes, on every transaction	Yes, for the final leg of conversion into reais inside Brazil
International leg (sending or collecting outside Brazil)	Depends on correspondent banks	Moves in stablecoin, without depending on a correspondent bank
Local banking rail in Brazil	Authorized Brazilian institution	Does not exist today inside Soulbit; the final conversion into reais depends on a third party outside the platform
Typical use	Any foreign exchange transaction inside Brazil	International leg of treasury for a company already operating with Brazil, not a substitute for local foreign exchange

The platform also does not offer yield on balances, cards, a proprietary token or a native app today. No stablecoin balance excuses either party from its foreign exchange and tax obligations in Brazil, overseen by the central bank, the Receita Federal and, for atypical transactions, Coaf.

IOF on foreign exchange is the second cost component, after the spread, in any transaction your company closes with Brazil, and the exact rate depends on the declared purpose, not on who is charging it or which currency moves. Before closing a supplier payment, a collection for an exported service or an international payroll transfer, confirm the transaction code and the rate in force with the authorized institution, because the decree governing IOF changes more often than most companies would like.