Special Tax Residency
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Taxation of real estate
1. Taxes paid at the time of acquisition
Transfer tax (IMT)
Taxable with progressive rates up to 7.5%;
Stamp duty (IS)
Taxable at a flat rate of 0.8%.
2. Taxes paid annually
Property tax (IMI)
With rates between 0.3% and 0.45% of the cadastral value of the property (consistently lower than the market value); (0.8% for rustic land);
Additional to the Land Tax
For private individuals, the tax is applicable on the sum of the VPT (property value) of the buildings destined to be used as a dwelling by the taxpayer, applying a rate of 0.7% for all the buildings with a VPT between € 600,000.00 and € 1,000,000.00, of 1% on the parcel that exceeds € 1,000,000.00 and of 1.5% on the one that exceeds € 2,000,000.00.
For married or cohabiting persons who opt for joint taxation, a rate of 0.7% is applied to the entire property with a TPV between € 1,200,000.00 and € 2,000,000.00, a rate of 1% to the part between € 2,000,000.00 and € 4,000,000.00 and a rate of 1.5% to the spare part.
Portuguese Property Income
Conditions of application
1. Becoming a tax resident in Portugal
(2 situations are possible):
Having a Portuguese address
(either by the purchase of property or by lease);
Staying for more than 183 days.
2. Not having been taxed as a resident in Portugal for the last five years. The fact of having a secondary residence in Portugal does not prevent the application of the regime.
Period of application of the regime – 10 years.
The status of non-habitual residents is individual. Each member of the couple will have to apply.
Declaration obligations
Each person must declare all their income when filing their annual tax return, regardless of its source and the taxation that will apply to it. Even exempt income must be reported. It will also be necessary to declare your accounts’ IBAN outside Portugal.
The regime with the approval of the following international entities:
- 1. European Commission;
- 2. International Monetary Fund;
- 3. European Central Bank.
In Portugal, there is no wealth tax, nor is there any inheritance or gift tax between spouses or in a direct line.
Obtaining non-habitual residence status
1st step
Obtaining a Tax Identification Number as a Non-Resident
2nd step
Obtaining an address in Portugal
3rd step
Change of tax residence to Portugal
4rd step
Electronic submission of the application for Non-Habitual Resident status.
Tax system applicable to income
Income from Portuguese Sources
1. Professional Income
Taxable at a flat rate of 20% if related to the exercise of “high value-added” professions (e.g. architects, consultants, doctors);
2. Property income
Will be taxed at a flat rate of 28%;
3. Real estate capital gains
Only 50% of the capital gain will be taxable, applying the general rates provided in the IRS Code;
4. Any other type of Income
In principle, it will be taxed following the standard Portuguese tax system, being, in particular, subject to the application of progressive rates up to 48%.
Exempt foreign source income *
1. Professional Income
exempted in Portugal when effectively taxed in the country of source;
2. Private Retirement Pensions
In the following situations:
- Taxable persons already registered as Non-Habitual Residents or whose application is pending on April 1, 2020;
- Persons subject to tax on the same date are considered residents for tax purposes and apply for registration as Non-Habitual Residents until March 31, 2020, or 2021, to meet the respective requirements in 2019 or 2020, respectively;
- As soon as such income is taxed in the respective source state;
- They are not considered by Portuguese law as pensions of Portuguese source (i.e., as soon as Portuguese Social Security entities do not pay them).
The pensions will be taxed at a fixed rate of 10% in the remaining cases.
3. Dividends, interest, royalties, real estate capital gains, etc.
Exempt when the Convention for the Avoidance of Double Taxation between Portugal and the country of source provides for the possibility of taxation in that country.
(*) (*) In the case of income from tax havens, it may be subject to an increased rate.
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