This article will outline the basic tax implications for each of these moments and what you can expect should you decide to sell your property.

Buying property

You are not required to be a Portuguese resident or have a residence permit to acquire real estate properties in Portugal.

However, even as a non-resident, you will have to obtain a Portuguese Tax Identification Number (NIF), and in case you are a non-EU resident, you will have to appoint a fiscal representative if you purchase/own a property in Portugal.

When acquiring a real estate property in Portugal, the following taxes will apply over the tax value or the acquisition value (whichever is higher) of the property:

  • Real Estate Transfer Tax (IMT) - up to 7.5% depending on the type of property: primary or secondary accommodation, plot of land for construction, commercial property, or rustic land. A special aggravated 10% rate applies to properties acquired by companies resident in blacklisted jurisdictions (you can see the complete list here).
  • Stamp duty (IS) – a rate of 0.8% is applied to the same value used to assess IMT.

Limited IMT exemptions are foreseen in the Portuguese tax legislation, such as those applicable to urban rehabilitation. A case-by-case analysis is recommended to assess whether each project qualifies for this or any other tax benefit.

In addition, you should also consider the notary and registration fees, which should range between € 750 and € 1,500.

The IMT, the IS and the notary/registration fees are due on the day of the final deed of acquisition.

Holding property

Following the acquisition, as you own a real estate property, you are liable to the annual payment of the following taxes:

Municipal Property Tax (IMI) – between 0.30% and 0.45% over the tax value of an urban property (different rates apply to rural property). A special aggravated 7.5% rate applies to properties owned by residents in blacklisted jurisdictions (you can see the complete list here).

The IMI is payable in up to 3 instalments (in May, August, and November) by owners of real estate properties on December 31 of the previous year.

Additional to the Municipal Property Tax (AIMI) – the AIMI is levied on the sum of the tax values of the properties held by a taxpayer on 1 January of each year. In the case of individual ownership, a deduction of € 600,000 to the taxable base of AIMI is allowed. Married or cohabiting couples who opt to submit a joint tax return are entitled to deduct up to 1,200,000 € from the VPT sum of all their urban holdings.

There are currently 3 rates of AIMI:

  • 0.7% for a real estate portfolio valued between € 600,000 and € 1,000,000.
  • 1% for a real estate portfolio valued between € 1,000,000 and € 2,000,000.
  • 1.5% for a real estate portfolio valued above €2,000,000.

An aggravated AIMI rate of 7.5% is applicable to properties owned through a company based in a blacklisted jurisdiction.

Properties classified as “for services”, “commercial or “industrial” purposes are not subject to AIMI.

The AIMI is payable in a single instalment in September of each year.

Selling property

Until recently, Portugal would tax the gains from the disposal of Portuguese-situs real estate differently according to the tax residence of the seller. However, this distinction has been eliminated as of 1 January 2023, and now capital gains resulting from the sale of Portuguese situs real estate are taxable only over 50% of its value at the general progressive personal income tax rates.

Keep this in mind!

Tax compliance is one of those issues where the devil is in the details. This is where having a local partner such as NEWCO is key.

NEWCO can handle all your Portuguese accounting and tax needs and act as your fiscal representative.

We have 30 years of experience and a versatile and multidisciplinary team that accommodates all your demands:

  • Business Setup and Management
  • Personal and Business Accounting and Tax Compliance
  • Obtaining a NIF, Bank Account and Fiscal Representation
  • Obtaining a Residence Permit
  • Relocating to Portugal
  • Real Estate

Contact us today!