REALWorld Law

Taxes

Ongoing taxation

What taxes (if any) are payable by the owner of real estate on a recurring basis and can these be reduced or offset in any way?

Portugal

Portugal

IMI is a municipal property tax, payable by the owner or occupier of the property (excluding tenants), on the VPT (value of the real estate assessed by the tax authority) of urban and rural properties.

IMI is payable on the VPT of each property at rates which range between 0.3% and 0.8%, depending on the municipality and on the type of property. An IMI surcharge (designated as “AIMI”) may apply for urban property(ies) with a VPT exceeding EUR600,000 – the rates range between 0.4% (for individuals) or 0.7% (for legal entities) and a maximum rate of 1.5%. These rates are applied on the properties’ aggregate VPT. For real estate directly owned by entities domiciled in a tax haven jurisdiction, the applicable AIMI rate is 7.5%.

Urban properties solely for the residential use of the buyer, as his primary domicile, may benefit from a temporary exemption from IMI for up to three years (extendable for an additional 2-year period), if the property’s value (for tax purposes) does not exceed EUR125,000. To benefit from this exemption, the income of the buyer’s household cannot exceed EUR153,300.

IMI exemptions are also available regarding buildings classified as being of national, public or local interest and buildings subject to rehabilitation (specific legal rehabilitation criteria must be observed). Other special exemptions and reductions may apply.  

IMI is borne by the owners of property and it is collected by the municipalities according to the valuation of the property determined by the tax authorities.