BRAZIL Law and Practice Contributed by: Caio Ferreira Silva, Thiago Braga Junqueira, Vinícius Pimenta Seixas and Rodrigo Vieira, Pinheiro Neto Advogados
the legal term. Such term is set by the com- petent bankruptcy court. If any of the acts/circumstances described as being subject to claw-back occur, the relevant transaction is deemed ineffective regardless of the intent to harm creditors and the existence of effective damage to the bankrupt estate (ie, they would be considered objectively ineffective). In addition to the events described above, any acts performed with the intent of defrauding creditors – ie, arising from fraudulent convey- ance perpetrated by the debtor and the con- tracting party – may also be revoked (clawed back), whether within the legal term or not, pro- vided that resulting losses to the estate are duly demonstrated. There are no stamp taxes in Brazil. However, financial transactions such as the closing of for eign exchange transactions, loans, insurance and securities are subject to the tax on financial transactions (Imposto sobre Operações Finan ceiras, or IOF), which is, to some extent, similar to a stamp tax. The IOF is a tax with a regulatory (extrafiscal) nature, which enables the Executive Branch to change its rates by Decree - without the need for prior legislative approval - as provided in Arti- cles 150, §1, and 153, §1, of the 1988 Brazilian Federal Constitution. In this context, published on May 22, 2025, and effective as of May 23, 2025, Decree 12,466/25 increased the IOF rates applicable to credit and foreign exchange trans- actions. 8. Tax Issues 8.1 Stamp Taxes
Prior to the changes implemented by Decree 12,466/25, onshore loans were generally sub- ject to the IOF-Credit levy at a maximum rate of 1.88%. Now, these transactions are subject to a maximum rate of 3.95%. Regarding cross-border loans, theoretically, this transactions triggers two financial transactions, each of which is potentially subject to the IOF levy: • the execution of the loan itself; and • the closing of the foreign exchange transac tion to allow the inflow of cash into Brazil. However, Brazilian legislation provides that the IOF on foreign exchange transactions (IOF-FX) prevails over the IOF-Credit. Prior to the changes implemented by Decree 12,466/25, cross-border loans were not supposed to be subject to IOF- FX, irrespective of their terms. With the changes, the settlements of foreign exchange transactions for the inflow of funds into the country, related to external loans subject to registration with the Central Bank of Brazil, contracted either directly or through the issuance of securities in the inter- national market with an average term of up to 364 (three hundred and sixty-four) days, became subject to IOF/FX at a rate of 3.5%. Finally, transactions involving securities are generally subject to the assessment of the IOF as well. In practical terms, the IOF is levied at regressive rates varying in accordance with the term of the security or its holding period – the longer the holding period, the lower the rate, reaching a 0% rate for investments that last more than 30 days.
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