Property buying guide for Portugal
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Taxes in Portugal
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Taxes in Portugal

Portugal has an attractive tax system. Taxes are generally lower than in other European countries and there is an exceptional tax regime for certain tax residents that considerably reduces expenses associated with business and other activities.

Individuals that spend more than 183 in Portugal are considered tax residents.

Transaction, registration and ownership taxes

Stamp duty (Imposto do Selo or IS) is 0.8% and the title deed transfer tax (Imposto Municipal sobre Transmissões or IMT) is 6.0–6.5%. Buyers pay both taxes upon purchase of real estate.

Annual real estate tax (Imposto Municipal sobre os Imóveis or IMI) for owners is 0.3–0.8% depending on municipality.

Capital gains and inheritance taxes

Capital gains tax is 28%, for non-residents only, and paid upon sale of the property. It is calculated on the difference between purchase price and sale price.

Inheritance and gift tax is 10% but property transfers to spouses, children, parents and grandparents are exempt.

Income and corporate taxes

Non-residents pay 25% income tax on earnings in Portugal (employment or pensions). Earnings from rental income, dividends and other investments are taxed at 28%.

According to Henley & Partners, specialised in “golden visas”, non-tax residents affiliated with countries that have a double taxation treaty with Portugal, including Russia, pay reduced tax on dividends (15%), royalties (10%) and capital gains (10%). They can also be exempt from tax on income from professional activity or employment in Portugal.

For tax residents, there are progressive tax rates from 14.5 to 48.0%, depending on the revenue band.

Income, EUR Rates, %
Under 7,000 14.5
7,000–20,000 28.5
20,000–40,000 37.0
40,000–80,000 45.0
Over 80,000 48.0

In addition to income tax, there is an additional charge of 3.5%.

Incomes exceeding €80,000 are charged 2.5% solidarity tax and 5% for incomes exceeding €250,000.

Corporate tax is 21%. In 2016, it expected to be reduced to 17–19%.

Exceptional tax regime

There is an exceptional tax regime for Non-Habitual Residents (NHR). This applies to foreign tax residents coming to reside in Portugal permanently but who did not have a residence permit during the last five years. This programme aims to attract highly-skilled individuals, medical professionals, teachers, IT specialists and investors.

According to Henley & Partners, income received under the NHR tax regime on the territory of Portugal is taxed at 20%. Income from employment, entrepreneurial activity abroad and pensions are exempt. NHR status is granted for 10 years.

Participants of the investor residence programme “Golden Residence Permit” can claim NHR as well.

Disclaimer: the information in the above article is for reference and may be subject to change over time. Persons interested in exact calculations should contact a certified tax specialist in this country before purchasing property in Portugal.

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    Property buying guide for Portugal
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    Kseniya Kolesnikova
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