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Article

5 de July de 2024

Law amends the Civil Code to unify rules on inflation adjustment and interest

By Fernanda Henriques Urizar e Cristina Maciel

The Law No. 14,905/2024, which amends the Civil Code (Law No. 10,460/2002), was sanctioned in order to unify the rules for the determination and calculation of inflation adjustment and interest, as well as to amend the Usury Law (Decree No. 22,626/1933), which ceases to apply to certain obligations.  The text was published at the Official Gazette of the Federal Union issued last Monday, July 1st, 2024.

What has changed?

Inflation adjustment:

The IPCA/IBGE (Extended National Consumer Price Index issued by the Brazilian Institute of Geography and Statistics) is now the official index for inflation adjustment in the context of obligations default, provided there is no contractual covenant or specific legal provision as to the index to be applied.

Default interest:

The “legal rate” of the interest due in the context of obligations default is now the difference between the Selic (Special System for Settlement and Custody) reference rate and the applicable inflation adjustment index (already in accordance with the new rules set forth as above).  Such “legal rate” shall be applied whenever interest rules have not been agreed or, if agreed, whenever the applicable rate has not been agreed or, yet, whenever they arise from a specific legal provision.

The calculation methodology and its application shall de determined by the National Monetary Council (CMN) and released by the Brazilian Central Bank (BC).

If the calculation of the “legal rate” results is a negative amount, the legal rate will be zero for the purposes of interest calculation within the relevant period.

Loans and “legal rate”:

The “legal rate” shall also be applied for the calculation of interest under loans (or “loans for economic purposes”) whenever interest rules have not been agreed or, if agreed, whenever the applicable rate has not been agreed.

Amendments to the Usury Law:

The Usury Law, which prevents charging interest rates above twice the “legal rate” and charging interest over interest, was already not applicable to transactions carried out by financial institutions as provided by Docket (Súmula) 596 of the Federal Supreme Court, and, based on the new Law, is no longer applicable to the following obligations:

  • Undertaken between legal entities.
  • Represented by credit notes or securities.
  • Carried out within financial, capital or securities markets.
  • Undertaken with financial institutions, institutions that are authorized to operate by the BC, funds or investment clubs, lease entities, simple credit entities and public interest organizations focused on credit concession.

What are the Main Effects of the Changes?

The main effects sought by the new law, as provided in the explanatory statement of the project that gave rise thereto, as well as in accordance with our understandings on its reach, are to:

  • Promote better legal security and financial predictability, reduce litigation and conflicting decisions on debt charges and, therefore, reduce the costs with legal liabilities because of unifying the rules for the determination of the calculation of the inflation adjustment and interest, especially when there are no contractual or legal provisions previously established.
  • End court discussions as to the applicability of Selic on the calculation of interest due in the context of private obligations default, which were diverged between the application of Selic and the 1% per month rate provided in the National Tax Code.
  • Provide additional loan alternatives for entities outside the banking system under more favorable conditions to borrower, promoting competitiveness with banking loans and encourage cost reduction of loans in general.
  • Address the need to soften the provisions of the Usury Law, seen as polemic by several economy sectors and subject to heated discussions and amendment over the years, including as to its validity, having been revoked and such revocation cancelled in the past.

The new rules will on inflation adjustment and interest, including as to the amendments to the Usury Law, will only become effective as of August 30, 2024 (60 days as of its publication, on July 1st, 2024).  However, the provisions related to the powers ascribed to CMN and BC for the determination and publication, respectively, of the calculation methodology and how to apply the new “legal rate”, becomes effective immediately (i.e., July 1st, 2024).


This bulletin is for information purposes only and should not be relied upon to obtain legal advice on any of the topics dealt with here. For additional information, please contact the leaders of the Tax team.

CGM Advogados. All rights reserved.

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