Portuguese Property Taxation

IMT - Property Transfer Tax

This is paid by the purchaser prior to signing the final deed of sale when a property is acquired. Proof of payment is required at the Notary. This is a tax levied on the transfer of ownership, or parts of properties rights, who are in Portuguese territory. The rate varies depending on the property purchase price or the VPT (Valor Patrimonial Tributário) depending which is higher. Slightly higher rates can be charged for the purchase of a second home.

• Rustic land: 5% (flat rate applies)
• Urban buildings only for housing: between 1% and 6%
• Urban buildings, only for permanent housing: up to 6%
• Other buildings and plots for construction: 6.5% (flat rate applies)
• Buildings gained by entities benefiting special tax policy: 8%

There is no IMT on Corporate Ownership property and if buying a property via share purchase in a non-resident company.
Flat IMT Rates
For properties with a tax asset value of over €1,102,920.00 a 7.5% IMT rate applies.
If buying a Portuguese company via share purchase and noone has acquired more than 74% of the share capital, IMT does not apply.
10% IMT rate is applied to properties acquired (directly or indirectly) by offshore entitites that are in included on the Portuguese blacklist (incl. Barbados & Gibraltar. Due to favourable tax regimes in these jurisdictions, a higher IMT rate is enforced. 

*The exemption from Municipal Property Transfer Tax (IMT) and Stamp Duty (IS) applies from
August 1, 2024:
• The measure is valid for young people aged 35 or under at the time of purchasing
the property. The exemption is not retroactive;
• The exemption does not apply to those who already own part of a residential
property, unless that part was sold more than three years before the new purchase;
• The exemption is exclusive for the first purchase of a property intended for own
permanent habitation. Anyone who already owns a property for this purpose is not
entitled to the exemption;
• In the case of couples, the exemption only applies to the part of the property
purchased by the person who meets the requirements, such as age or the absence
of another property;
• The process requires filling in specific codes in the Tax transfer declaration, to be
submitted on the Finance Portal, or sent via the E-balcão (Finance Portal) or
presented in person at any Finance Office;
• The exemption is valid for all young people who meet the criteria, regardless of
nationality;
• The exemption applies to properties up to €316,772. For properties of a higher
value, the exemption is partial and only applies to the first €316,772.

Stamp Duty, Notary & Legal Fees

The buyer pays these fees prior to signing the notarial deed and the registration of the property into the buyer’s name. Stamp duty is 0.8% of the purchase price or tax asset value - whichever is the highest, but when buying with a mortgage another 0.8% is paid over the value of the mortgage.

Registration of the acquisition in the Land Registry Office costs €250.00 and this is usually actioned by the lawyer. The notary and lawyer fees vary depending on the value of the property and how complex the deal is ie. buying with a mortage or requesting extra services. These will have to be paid by the buyer after signing the Final Deed of conveyance.

Most lawyers will charge between 1% to 2% (+ VAT) on the sale price and will carry out all the searches, prepare the documentation needed for both the promissory contract for purchase and sale as the Final Deed.

IMI – Annual Property Tax

This tax is an annual fixed rate which varies between 0.3% and 0.45% depending upon the council where the property is located. The IMI is paid annually or in two or three instalments per year dependant on the amount due. The IMI for rustic/rural properties is charged at 0.8%. Properties held by white-listed companies have a flat IMI rate of 0.4%, whereas a much higher rate of 7.5% applies where the property is held (both directly or indirectly) by offshore entities which are included on the blacklist of Portugal.

AIMI – Additional Municipal Property Tax

This is a tax that is a combined total on the sum of the values of the rateable values of property tax (VPT), owned by an individual or couple. There is no AIMI to pay up to the value of EUR 600,00. AIMI is paid:

• For values between EUR 600,000 to 1mill – 0.7%
• On values from EUR 1 – 2mill – tax is EUR 2,800 (0.7% of EUR 4000,000)+ 1% on a value above EUR 1mill
• Above EUR 2mill – tax is EUR 2,800 (0.7% of EUR 4000,000)+ 1% on value up to EUR 2mill, + 1.5% value over EUR 2mill
• AIMI for corporate-owned properties is 0.4% of the rateable value
• Similar to IMI a rate of 7.5% applies to offshore properties

AIMI does not apply to no-urban properties and those registeres as commerdcial, industrial or service providing.

Capital Gains Tax

A capital gain occurs when you sell something for more than you spent to acquire it. In Portugal, if you own property or other assets, you could face capital gains tax. Some expenses accrued during ownership can be offset against this tax such as structural refurb costs, notary, registration and estate agency fees. This tax will only apply to gains made on real estate and investments resulting in personal items not being taxed and inheritances are only subject to a limited form of stamp duty. For non-residents, CGT is at a rate of 28%. Residents are not taxed on 50% of the gain and the rate depends on the income level.

There is a possible exemption from CGT when a primary residence  is sold and the proceeds of the sale are re-invested into another primary residence in the EU/EEA within the following 36 months.

For Corporate ownership, there is a flat CGT rate of 25% for foreign companies.

Other Tax Tips for Portuguese Tax Residents

• There is no inheritance tax for immediate family members (spouse, ascendants, and descendants). However, a 0.8% stamp duty based on the VPT must be paid on gifts to close family members. Gifts or inheritances to spouses, ascendants, and descendants are exempt from Gift/Inheritance Tax, while other family members or unrelated parties are subject to a 10% stamp tax.
• There is no wealth tax or levy on significant estates or fortunes in Portugal. However, foreign bank accounts must be disclosed in the annual income tax return, in accordance with CRS regulations.
• Capital gains from the sale of second-hand valuables, such as art, classic cars, and collectibles, are exempt from taxation unless the seller is a professional trader.
• Income or gains from cryptocurrencies are generally not taxed, unless earned by professional traders. Cryptocurrencies held for over 365 days are typically tax-exempt.
• Tax incentives for real estate investments in Portugal are available, particularly for urban rehabilitation or renewal projects. These incentives provide benefits in Property Transfer Tax (IMT), Property Tax (IMI), and Personal Income Tax (IRS). Reduced tax rates are also offered for real estate transactions, dividends, and interest earned within Portugal.