Fonte: ITR

Imposing the tax on virtual assets is a measure that appears to have no legal, economic or statistical basis, one expert told ITR

Local experts called for caution amid rumoured government proposals to extend Brazil’s tax on financial transactions to those involving virtual assets, with one arguing it would likely result in “widespread litigation”.

Since November, multiple reports have claimed that Brazil’s government is considering taxing the use of cryptocurrencies for international payments.

According to preliminary estimates by economists interviewed by Brazilian publication Valor Economico, the government could raise between R$3 billion (US$540 million) and R$5 billion per year if it decides to levy the Tax on Financial Transactions (IOF) on transactions involving virtual assets.

Allan Fallet ,- a tax partner at law firm Duarte Garcia, Serra Netto e Terra in São Paulo – tells ITR the Allan Central Bank has already classified such transactions as foreign-exchange operations, thereby bringing them within the scope of the IOF.

He also tells ITR the information circulating in the market should be read with caution. Preliminary revenue estimates are neither the result of a formal legislative proposal nor of a finalised technical study published by Brazil’s government, he notes.

They largely stem from market analyses and journalistic reporting based on informal discussions within the Brazilian executive branch’s economic team, he tells ITR.

“At this stage, therefore, there is no officially enacted or proposed tax specifically targeting crypto transactions beyond the existing income tax and reporting framework already in force,” he adds.

Fallet argues that the idea of extending the IOF – a tax constitutionally designed to apply to credit, foreign exchange, insurance and securities transactions – to crypto assets raises serious legal and policy concerns.

“From a strict legal perspective, crypto assets, including stablecoins, are not classified as foreign currency or securities under Brazilian law, and the expansion of the IOF’s taxable event would require a clear legislative amendment approved by Congress,” he claims.

“From a policy standpoint, using a highly distortionary tax instrument for predominantly fiscal purposes runs counter to international best practices and to Brazil’s own commitments within the OECD framework to gradually reduce taxes on financial and cross-border flows.”

Fallet adds that, in practical terms, introducing the IOF to crypto transactions would likely be counterproductive. It could increase transaction costs, generate legal uncertainty, and incentivise migration to less transparent or offshore environments, he tells ITR.

The move would ultimately undermine both innovation and effective tax enforcement, Fallet asserts.

Litigation expected

The idea of levying the IOF on transactions involving virtual assets seems to be a more macroeconomic issue than a purely tax-technical one, Ana Carolina Fernandes Carpinetti, a partner at law firm Pinheiro Neto Advogados in São Paulo, tells ITR.

“There is a clear revenue-raising component, especially in a context of fiscal pressure,” she says.

Taxing virtual assets in a manner closer to so-called ‘traditional’ financial assets could promote tax neutrality and competitive parity between different forms of investment, according to Carpinetti.

However, Carpinetti claims the main downside of imposing the IOF on virtual asset transactions may be a loss of attractiveness of the Brazilian market for a fast-growing and highly mobile sector.

“Brazil already faces structural challenges, such as a complex tax system, perceived country risk and recurring concerns around legal certainty,” she says.

“Recent episodes – including mid-year changes to IOF rules and the broader debate around levies such as CIDE – are closely watched by foreign investors and can weigh heavily on decisions about where to allocate capital.”

Ana Paula M Costa Baruel, a tax partner at Baruel Barreto Advogados in Brazil, tells ITR the issue of the IOF being applied to transactions involving crypto assets calls for caution.

The regulatory framework for crypto assets means that, even if for regulatory purposes, transactions involving them may be subject to the same rules applicable to foreign exchange transactions, she says.

It is not possible to equate them to currencies for the purposes of levying the IOF on foreign exchange transactions, according to Baruel.

Should Brazil’s federal government submit a legislative proposal to impose the IOF on foreign exchange transactions, there would likely be widespread litigation concerning the legality and constitutionality of such a tax, she argues.

This would be the case particularly if implemented through sub-statutory instruments, such as decrees, Baruel also notes.

Similarly, tax adviser Daniel Franco Clarke of Mannrich e Vasconcelos Advogados in Brazil tells ITR that extending the IOF on foreign exchange transactions to those that involve crypto assets could raise legal questions.

Brazilian law expressly treats crypto assets as assets rather than currency, and they have historically been subject to taxation under capital gains rules upon disposal, he says.

“Applying the IOF based solely on a regulatory reclassification would likely be challenged by taxpayers,” he adds.

But why?

Cintia Meyer, a tax partner at Martinelli Advogados in Brazil, tells ITR that imposing the IOF exclusively on virtual asset transactions would create “distinct and unequal treatment”.

She suggests it wouldn’t be right for only this type of investment to be subject to the IOF while other financial investments and assets are not.

“In this case, what we see is a purely revenue-driven objective,” says Meyer.

“Over the past year, Brazil has experienced a very aggressive increase in tax collection, and recent data confirms this trend for both 2024 and 2025. Various transactions have come under scrutiny, not as part of a regulatory policy, but as a means of increasing revenue.”

It’s important to recall that the IOF is an extra fiscal tax, Meyer highlights. Its purpose is not merely to raise revenue, but to influence economic behaviour, she says.

“For example, increasing IOF on credit operations aims to discourage excessive borrowing. It is designed to direct market behaviour,” she notes.

Imposing the IOF on virtual assets would therefore signal an intention to reduce or discourage transactions involving these assets, she argues.

“The key question is: why? What is the economic justification? What is the impact on economic activity?”

Meyer adds: “There appears to be no legal, economic or statistical basis for such a measure. Virtual assets are now part of mainstream investment behaviour, just like other asset classes.

“They do not cause harm to the economy, nor do they generate negative externalities that would justify this type of intervention.”

She argues that, on the contrary, imposing IOF could harm transactions involving virtual assets and restrict a free market environment where investors should have the freedom to choose among different asset classes and diversify their investments.