How to calculate Interest in Brazil

Quick takeaways

• Brazil’s default rate for moratory (late-payment) interest comes from Código Civil (Lei 10.406/2002), art. 406, which (as revised by Lei 14.905/2024, effective 30 Aug 2024) links the default moratory rate to a SELIC-based mechanism rather than a manually chosen fixed percentage.
• DocketMath (Interest calculator) can calculate this jurisdiction-aware framework as long as you provide:

  • principal,
  • the interest period start date and end date, and
  • whether you’re using default moratory (art. 406) vs a contractually specified / special legal rule.
• The biggest drivers of the result are:

  1. start/end dates,
  2. principal, and
  3. whether the rate is default (art. 406) or contract/special rule.

Inputs you need

Before you run anything in DocketMath, collect these inputs. DocketMath’s Brazil setup works best when you explicitly mark whether you are applying the default rule or a contract/other legal rule.

Financial inputs

• Principal (P): the amount on which interest accrues (e.g., invoice amounts, damages principal, restitution principal).
• Currency formatting: ensure DocketMath uses BRL formatting (in practice, enter the numeric amount you want the interest calculated on).

Timing inputs

• Start date (D1): when interest begins accruing for your scenario (the correct “start” date can depend on the legal context).
• End date (D2): the calculation “as of” date (e.g., payment date, settlement date, or judgment date—whichever matches your scenario).

Rate framework selector (the key decision)

• Default moratory interest (art. 406): choose this when:

  • no late-interest rate was agreed, or
  • the agreement did not specify a rate, or
  • interest is determined by law.
• Contractual / special rule: choose this if the contract or a specific statute supplies a late-interest rate mechanism (you’ll need the correct rate inputs/settings DocketMath requires).

Optional validation inputs (recommended)

• Check period length: confirm that your D1→D2 window matches what you intend (e.g., 120 vs. 2,400 days).
• Compounding assumptions: for Brazil default moratory (art. 406), the SELIC-linked mechanism is handled per the jurisdiction logic; avoid switching to generic “simple interest” assumptions unless the governing rule you’re applying actually calls for it.

How the calculation works

1) Identify the applicable rule: default moratory interest vs an agreed rate

Brazil’s civil-law default starts with Código Civil (Lei 10.406/2002), art. 406, revised by Lei 14.905/2024 (effective 30 Aug 2024).

Core idea (practical framing):
When moratory interest is not agreed, is agreed without a specified rate, or is determined by law, the rate is not simply “pick a % and apply it.” Instead, art. 406 directs a SELIC-based result—grounding the default moratory rate in the SELIC reference framework.

STJ Súmula 530/2016 supports the approach to applying this framework in the way courts treat the rate mechanism in practice (e.g., consistency in how art. 406’s SELIC-linked framework is used).

2) What DocketMath does in the Brazil workflow

When you set Jurisdiction = Brazil (BR) and select default moratory (art. 406), DocketMath uses jurisdiction-aware logic aligned with the statutory framework:

• Step A — Interest window: uses D1 and D2 to define the period over which interest accrues.
• Step B — SELIC-referenced rate path: applies the art. 406 SELIC-based mechanism over that window.
• Step C — Compute interest on principal: calculates the interest over the period and outputs the results (typically interest amount and, if shown, total due).

3) How inputs change the output (change-one-thing diagnostics)

Example pattern: date changes are powerful

Assume:

• Principal: BRL 50,000
• Rule: default moratory (art. 406)

Scenario A:

• D1 = 2024-09-01
• D2 = 2025-01-01

Scenario B:

• D1 = 2024-09-01
• D2 = 2025-07-01

Even with the same principal and same D1, a longer D2 typically increases:

• the number of interest-accrual days/months, and
• the effect of SELIC-linked application across additional time

➡️ Result: Scenario B usually produces a higher interest amount and higher total due (if shown).

Example pattern: contractual interest overrides the default

If a contract specifies a late-payment rate mechanism that qualifies to displace art. 406 default logic, then:

• you should switch DocketMath from “default moratory (art. 406)” to “contractual / special rule” (or otherwise provide the correct contractual rate setup, as applicable).

➡️ If you run both modes and get a large difference, that often indicates you selected the wrong rule source (default vs contract/special), or you’re missing the agreed-rate parameters in DocketMath.

4) “Default” period scope in this guide (clear and general)

This guide provides the general/default period approach: it applies when the art. 406 conditions are met (no agreed moratory interest rate, no specified rate, or legal determination).

It does not automatically identify claim-specific special regimes (for instance, specialized causes of action where a different interest regime may apply). If your situation is governed by a distinct statute or claim framework, set DocketMath to that rule set before relying on the number.

5) Practical workflow inside DocketMath (Brazil)

1. Open DocketMath → Interest tool: /tools/interest
2. Set Jurisdiction = Brazil (BR).
3. Select the correct interest type:

   • Default moratory (art. 406), or
   • Contractual / special rule.
4. Enter:

   • Principal (P)
   • Start date (D1)
   • End date (D2)
5. Run and record:

   • Interest amount
   • Total due (if displayed)
6. Sanity-check:

   • move D2 forward by a small step (e.g., 30–60 days) and confirm interest increases in the expected direction.

Common pitfalls

• Using a fixed “annual X%” assumption for Brazil default moratory interest. Art. 406’s revised approach is SELIC-referenced, so the effective rate is path-dependent over your date window.
• Wrong interest window: swapping D1 and D2, using the wrong “interest start” date, or using a filing date when the interest period actually starts later (depending on your legal facts).
• Applying the default rule when the contract specifies a late-interest rate. If the contract provides a qualifying late-interest mechanism, art. 406 default logic may not be the right framework.
• Using simple-interest mental math to estimate results. SELIC-linked mechanisms often won’t match a simple %*days formula across multi-month periods.
• Ignoring the 2024 update to art. 406: the revised wording comes from Lei 14.905/2024 and is effective 30 Aug 2024. If your interest period crosses that date, double-check your start/end dates and the DocketMath rule selection.
• Not distinguishing “moratory interest” from other amounts (e.g., monetary correction or other financial components). This guide focuses on interest consistent with the art. 406 framework; other adjustments may require separate calculations depending on your document structure.

Sources and references

• Código Civil (Lei 10.406/2002), art. 406 (redação dada pela Lei nº 14.905/2024, effective 30 Aug 2024) — default moratory interest rule
  Source: https://www.planalto.gov.br/ccivil_03/leis/2002/l10406compilada.htm
  Statute text excerpt (summary of mechanism): art. 406 provides that when moratory interest is not agreed, agreed without a rate, or derives from legal determination, the rate is that resulting from the subtraction between the SELIC reference rate and the SELIC-based reference described in the article.
• Lei 9.065/1995 — SELIC (Taxa SELIC) basis.
• STJ Súmula 530/2016 — practical guidance on applying the framework in litigation contexts.

Next steps

• Run a base calculation in DocketMath using:

  • the correct principal, and
  • the correct D1/D2 window