LCI (Real Estate Credit Note)/LCA (Agribusiness Credit Note) Equivalent to CDB (Bank Certificate of Deposit)

Discover the equivalent rate that a taxable CDB (Bank Certificate of Deposit) needs to offer to match the net yield of a tax-free LCI (Real Estate Credit Note) or LCA (Agribusiness Credit Note). Compare tax-free and taxable investments directly in terms of net return.

Quick Options:
Short Term (90 days) Medium Term (360 days) Long Term (720 days)
Fill in the data and click on Simulate Equivalence to see the results.
Required CDB (Bank Certificate of Deposit) Equivalent
0.00% of CDI
Most Profitable Option
-
Net Profit LCI (Real Estate Credit Note) / LCA (Agribusiness Credit Note)
$ 0.00
Net Profit CDB (Bank Certificate of Deposit) Comparison
$ 0.00
Income Tax Rate Applied to CDB (Bank Certificate of Deposit)
0.0%
Absolute Difference
$ 0.00

Net Yield Comparison

Regressive Table of Fixed Income Tax

The tax rate decreases as the investment term increases:

Up to 180 days22.5%
From 181 to 360 days20.0%
From 361 to 720 days17.5%
Above 720 days15.0%

Projected Amount Details

Specification LCI (Real Estate Credit Note) / LCA (Agribusiness Credit Note) (Tax-free) CDB (Bank Certificate of Deposit) Comparison (Taxable) Minimum Equivalent CDB (Bank Certificate of Deposit)

How does the equivalence between CDB (Bank Certificate of Deposit) and LCI (Real Estate Credit Note)/LCA (Agribusiness Credit Note) work?

Many beginner investors make the mistake of looking only at the nominal rate offered in fixed income. It's common to see questions like: *"What yields more: an LCA (Agribusiness Credit Note) at 90% of CDI or a CDB (Bank Certificate of Deposit) at 110% of CDI?"*. The answer is not straightforward because it depends entirely on the Income Tax (IR).

Tax Exemption for LCI (Real Estate Credit Note) and LCA (Agribusiness Credit Note)

LCI (Real Estate Credit Note)s (Letras de Crédito Imobiliário) and LCA (Agribusiness Credit Note)s (Letras de Crédito do Agronegócio) are securities issued by banks to raise funds for the housing and agribusiness sectors, respectively. As an incentive from the federal government to these key sectors, the yield generated by LCI (Real Estate Credit Note)s and LCA (Agribusiness Credit Note)s for individuals is 100% exempt from Income Tax.

Regressive Table of IR for CDB (Bank Certificate of Deposit)

On the other hand, the CDB (Bank Certificate of Deposit) (Certificado de Depósito Bancário) is taxed on the net earnings on the redemption date. The tax follows the Regressive Table of National Fixed Income, which benefits long-term investments with decreasing rates:

The Equivalence Formula

To compare them properly, we bring the LCI (Real Estate Credit Note)/LCA (Agribusiness Credit Note) rate to the equivalent level of a taxable CDB (Bank Certificate of Deposit) using the formula:

$$\text{CDB (Bank Certificate of Deposit) Equivalent Rate} = \frac{\text{LCI (Real Estate Credit Note)/LCA (Agribusiness Credit Note) Rate}}{1 - \text{Income Tax Rate}}$$

If you have an LCA (Agribusiness Credit Note) paying 88% of CDI for 1 year (20% Income Tax), the equivalent rate would be $88 / (1 - 0.20) = 110\%$. That is, any CDB (Bank Certificate of Deposit) paying less than 110% of CDI will yield less net than your LCA (Agribusiness Credit Note), and any CDB (Bank Certificate of Deposit) paying more than 110% of CDI will yield more net.

Frequently Asked Questions

Normally, no. CDB (Bank Certificate of Deposit)s, LCI (Real Estate Credit Note)s, and LCA (Agribusiness Credit Note)s are exempt from administration, custody, or brokerage fees at most brokerages and banks. The only rate that may exist in some cases of CDB (Bank Certificate of Deposit)s with daily liquidity redeemed in less than 30 days is the IOF (Tax on Financial Operations), which regresses until it reaches zero on the 30th day.

Yes. Both CDB (Bank Certificate of Deposit)s and LCI (Real Estate Credit Note)s/LCA (Agribusiness Credit Note)s are covered by the FGC (Credit Guarantee Fund). The FGC ensures the reimbursement of up to $250,000 per CPF and per financial institution issuer, limited to the global ceiling of $1 million every 4 years, in case the issuing bank undergoes intervention or declares bankruptcy.

After the regulatory changes by the National Monetary Council (CMN) in February 2024, the minimum term for redeeming LCI (Real Estate Credit Note)s became 12 months, and for LCA (Agribusiness Credit Note)s became 9 months (previously 90 days). This means that LCI (Real Estate Credit Note)s and LCA (Agribusiness Credit Note)s lost space in the very short term, making daily liquidity CDB (Bank Certificate of Deposit)s the standard option for terms less than this.