Before moving on, you should know that the concept of property used in Portugal is "full ownership", which is based on the full and exclusive right to use, enjoy and have immovable property at your disposal. This right gives the Portuguese property system an important competitive advantage.
IN THE AREA OF TAX LAW, YOU SHOULD KEEP IN MIND RELEVANT INFORMATION ABOUT TAXES, RATES AND BENEFITS APPLICABLE TO WEALTH.
Please Note! The Municipal Tax on the Transfer of Property for a Valuable Consideration and Stamp Duty is charged on the acquisition of property.
1. What is the Municipal Tax on the Transfer of Property for a Valuable Consideration?
It is a tax charged on the transfer, for a valuable consideration, of property rights over immovable property or parts of this right (use and habitation, surface rights, usufruct, among others).
2. What is this tax applied to?
It is applied to the value of the purchase contract or to the taxable value of the property, whichever is greater.
The tax is the result of the application of variable rates which, in the case of property exclusively for residential use, can vary between 0 and 6%. Property located in the Autonomous Regions of the Azores and Madeira benefits from reduced rates.
3. What is Stamp Duty?
It is a tax applied to all acts, contacts, documents, deeds, papers and other legal factors or situations, including the transfer of goods free of charge. In the case of property purchases, it is applied to the value of the purchase contract, or to the taxable value of the property, whichever is greater. It is the result of the application of a 0.8% rate.
4.What is Taxable Value?
It is the value registered in the property register on the date of sale. In this register appears the description of the property, its location, its taxable value and the identity of its owners. Registers are updated annually on December 31.
5. Who is responsible for paying the taxes?
The interested party purchasing the property.
6. When should these taxes be paid?
They should be paid before the property purchase document is signed. If the transfer of ownership occurs overseas, the tax must be paid during the following month.
7. How are the taxes paid?
They can be paid by visiting any Finance Service Office, through the Finance Website or at a Casa Pronta service desk.
If you are a property owner, you should take the following information into account
1. What is the Municipal Property Tax?
It is the municipal tax on the taxable value of properties.
2. Who has to pay this tax?
Anyone who owns a property, on December 31 each year.
3. What is the tax rate?
A variable rate of between 0.3% and 0.5%, established by municipalities on an annual basis, is applied to the taxable value of residential, commercial or industrial urban properties, and others used for services and other uses.
4. When should this tax be paid?
Annually, for the previous year, on the following dates:
- An amount of €250 or less - an annual payment in April;
- An amount of more than €250 and less than or equal to €500 - two payments in April and November;
- An amount of more than €500 - three payments in April, July and November.
5. How is this tax paid?
At any Finance Service Office, or through CTT, Multibanco or Home Banking.
You should know that if you reside outside the European Union, you must appoint a representative with a tax domicile in Portuguese territory. This can be done at any Finance Service office or through the Finance Website.
A Stamp Duty rate of 1% applies if the taxable value of a residential urban property is 1,000,000 Euros or more.
There are higher rates if the purchasing party is a legal entity resident in a country, territory or region subject to a tax regime that is clearly more favourable. In these cases, the rates charged are as follows:
- Tax on the Transfer of Property for a Valuable Consideration – 10%
- Municipal Property Tax – 7.5%
- Stamp Duty – 7.5% (on all urban properties with a value of 1,000,000 euros or more)
Information about some tax benefits that apply to these taxes:
Tourist Use and Guest Houses
Properties forming part of resorts that have been assigned for tourist use, or that are used as guest houses, are exempt from the Municipal Property Tax for a period of seven years.
Properties on which the property owner has carried out refurbishment work may be entitled to Municipal Property Tax and Tax on the Transfer of Property for a Valuable Consideration benefits.
Acquisitions of properties classified individually as being of national interest, public interest or municipal interest, under the terms of applicable legislation, may be entitled to Tax on the Transfer of Property for a Valuable Consideration benefits (depending on the requirement to submit this prior to the act or contract and prior to verification), and to Stamp Duty and Municipal Property Tax benefits.
THIS INFORMATION IS NOT INTENDED TO BE A SUBSTITUTE FOR CONSULTING THE APPLICABLE LEGISLATION
Tax and Customs Authority