What taxes are payable in relation to the purchase of real estate via the various types of corporate vehicle available and who is responsible for the payment of these taxes?
The following taxes may apply to the purchase of real estate, depending on the structure of the deal.
Asset deals:
Share deals:
Municipal Property Transfer Tax (IMT) will be calculated on the price of the transaction or on the VPT (value of the real estate assessed by the Tax Authority), whichever is higher.
IMT is calculated using the following formula:
(Taxable value x Rate) – Threshold deduction = IMT to be paid.
IMT is charged at the following rates:
Taxable value (€) |
Rate |
Threshold deduction (€) |
Up to 101,917 |
0 |
0 |
Above 101,917 to 139,412 |
2% |
2,038.34 |
Above 139,412 to 190,086 |
5% |
6,220.70 |
Above 190,086 to 316,772 |
7% |
10,022.42 |
Above 316,772 to 633,453 |
8% |
13,190.14 |
Above 633,453 to 1,102,920 |
6% |
0 |
Above 1,102,920 |
7.5% |
0 |
Taxable value (€) |
Rate |
Threshold deduction (€) |
Up to 101,917 |
1% |
0 |
Above 101,917 to 139,412 |
2% |
1,019.17 |
Above 139,412 to 190,086 |
5% |
5,201.53 |
Above 190,086 to 316,772 |
7% |
9,003.25 |
Above 16,772 to 607,528 |
8% |
12,170.97 |
Above 607,528 to 1,102,920 |
6% |
0 |
Above 1,102,920 |
7.5% |
0 |
To discourage the purchase of real estate in Portugal through offshore companies, IMT is levied at a rate of 10% if the buyer is a company established in a country, territory or region with a preferential tax regime. Further, as of 1 January 2021, the same punitive tax rate applies, when the acquirer is an entity dominated or controlled, direct or indirectly by a company established in a country, territory or region subject to a preferential tax regime. In these cases, no exemptions are made available.
Since 2016 the acquisition of real estate by open-end or privately placed closed-end Real Estate Investment Funds or Retirement Savings Funds are no longer exempt from IMT (until 31 December 2018 it was still possible to challenge the 2016 repeal of the exemption with respect to Real Estate Investment Funds; this interpretation has been followed in numerous arbitration decisions).
However, the property deals may be exempt from IMT or may benefit from tax reliefs in the following cases, among others:
Real estate owned by open-ended or publicly offered closed-end Real Estate Investment Funds (REIFs), pension funds, or retirement funds no longer benefit from a 50% IMI exemption.
The transfer of property is also subject to a flat rate of 0.8% of stamp duty. Stamp duty will be calculated on the price of the transaction or on the VPT, whichever is higher.
Although, as a rule, the transfer of property and shares in Portugal is exempt from VAT, transfers of property can be subject to the tax. A seller may waive the exemption if certain conditions have been met and they have complied with various formalities.
If the exemption is waived, VAT can be recovered in accordance with provisions in the Portuguese VAT code.
In the case of a share deal, as of 1 January 2021, IMT applies to the purchase of an equity position both in a private limited liability company (Lda.) and in a corporation (S.A.) which holds real estate assets located in Portugal if the following requirements are cumulatively met:
Until December 31, 2020, IMT could only apply with respect to private limited liability companies, but this tax applied in all cases resulting in a transfer of at least 75% of the share capital of the company.
If the purchase of shares involves a privately placed closed-end Real Estate Investment Funds, the transaction is subject to IMT if after the acquisition the acquirer holds 75% or more of the units in the fund.
In both cases – asset deals and share deals ― the buyer is responsible for the assessment and payment of IMT, as well as VAT (reverse charge mechanism), if applicable. IMT must be paid before the deed and the notary is obliged to confirm its payment.
Stamp duty, where applicable, is paid by the buyer (who normally also pays the notary's fees). The buyer must present the payment proof to the notary at the moment of the transfer signature. The tax is paid through a document issued by the tax authority (the buyer can issue the document in the tax authority website or request it in a tax authority service).
Also, the attribution of immovable property by means of reimbursement in kind of participation units, arising from the liquidation of privately placed closed-end real estate investment funds, is subject to IMT.
The same is applicable to the transmission of immovable property arising from the merger of the referred kind of Funds.