The Federal Supreme Court (STF) will start the analysis of Leading Case No. 104, which discusses the constitutionality of the Tax on Financial Transactions (IOF) levied on loans between non-financial institutions. The trial is scheduled to take place between 09/29/2023 and 10/06/2023 in the virtual plenary of the Court.

The discussion revolves around the constitutionality of the Article 13 of Law No. 9,779/99, which provides for the levy of the IOF on “credit operations” carried out between legal entities that do not belong to the financial system, or between legal entities and individuals. According to this provision, such operations must comply with the same standards applicable to financing and loan operations carried out by financial institutions.

However, given the regulatory nature of the IOF, taxpayers claim that the tax should not be levied on loan transactions involving financial resources between individuals and/or legal entities that do not practice financial activities.

According to this line or argument, the concept of “credit operations” of Law No. 9,779/99 requires that at least one of the parties is a financial institution or similar, which does not occur in the case of loans signed between two non-financial parties.

Finally, taxpayers also question the charge of the IOF on current account operations (operações de conta corrente), in which two companies of the same economic group make monetary values available to each other, creating reciprocal obligations to record the amounts payable and receivable in specific accounts.

Considering that the trial is scheduled to begin on September 29th, it is recommended to evaluate the filing of a judicial lawsuit as soon as possible, to minimize the risk of a possible time restriction in case the STF decides to modulate the effects of the final decision.

KLA’s tax team is available to clarify any doubts and assist in the analysis of potential protective measures.


This newsletter was written by Felipe OmoriMatheus Barreto and André Koscak.

For additional information, contact our Tax team:
Henrique Lopes
Victor Polizelli
Álvaro Lucasechi 
José Flávio Pacheco
Juliana Nunes
Luís Flávio Neto
Felipe Omori

Leave a Reply

Your email address will not be published. Required fields are marked *