What is Come-Cotas?

What come-cotas is

Come-cotas — literally “quota eater” — is the nickname for the advance collection of income tax on certain investment funds. Twice a year, on the last business day of May and November, the tax authority charges tax on the gains accumulated so far, even if you have not withdrawn anything.

The name comes from how it is charged: instead of debiting cash from your account, the fund cancels some of your units to pay the tax. The value per unit stays the same; you simply end up holding fewer units.

Which funds it applies to

Not all of them. This is the part that confuses people most:

In the funds with no come-cotas, tax only appears when you redeem.

How much is charged

The come-cotas rate is always the lowest rate on that fund’s tax table:

• 15% for long‑term funds (portfolio with an average maturity above 365 days)
• 20% for short‑term funds (average maturity up to 365 days)

That does not mean the bill is settled. When you redeem, the tax authority works out the correct rate for how long the money stayed invested and charges only the difference. Whatever was already paid through come-cotas is credited back.

A practical example

You hold $2,000 in a long‑term fixed income fund. Over six months it earns $80.

In November, come-cotas charges 15% on that $80 = $12. The fund cancels units of yours worth $12. Your balance goes from $2,080 to $2,068 — and you still have not touched the money.

Why it matters

The real cost is not the $12. It is what those $12 would have earned over the following years, because they left early. Compound interest starts working on a smaller base, and the gap widens with time.

That is why, for a goal many years away, it is worth comparing a fund with come-cotas against options that only charge tax at the end.

What to do with this

• Do not panic if the balance drops in May or November without any withdrawal — it was probably come-cotas.
• Check the statement in those months: the number of units falls and the value per unit does not change.
• For long horizons, factor in whether tax is charged early or only at redemption.
• Do not confuse it with the management fee: that one is charged by the fund manager, not by the tax authority.

This entry explains a tax rule that appears in fund statements written in Portuguese. Tax rules change and there are exceptions by fund type — for a real decision, check your fund’s tax statement or consult an accountant.