[BUYING AND SELLING REAL ESTATE IN PORTUGAL]
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VI. TAX REGIME VI.1. PROPERTY ACQUISITION VI.1.1. REAL ESTATE TRANSFER TAX (“IMPOSTO MUNICIPAL SOBRE AS TRANSMISSÕES ONEROSAS DE IMÓVEIS”) AND STAMP DUTY (“IMPOSTO D O SELO”) The acquisition of real estate is subject to two types of taxes, which must be paid by the purchaser to the tax authorities before the signing of the real estate acquisition agreement. IMT – Real Estate Transfer Tax, which is calculated over the price of the real estate or its tax patrimonial value (“VPT”) , if higher (which is uncommon). IMT tax rates for housing buildings are progressive between 0% to 7.5% (for buildings whose acquisition price or VPT exceeds € 1,050,400) and fixed for rural property (5%) and plots of land for construction or other urban buildings (6.5%), or when the purchaser, not as an individual, has office, or is deemed as being held or controlled by an entity domiciled, at tax haven (10%). Nevertheless, Portuguese law foresees some exceptions or deferrals on IMT payments, some of them applicable when the acquisition is made by using some of the special purpose acquisition vehicles identified above. Indeed, real estate companies benefit from an actual exemption as long as the property acquired is re-sold (i) within 3 years; (ii) in the same physical state in which it was acquired; (iii) without the purpose of being re-sold again. Upon the acquisition of property in the context of urban rehabilitation operations over buildings, an exemption is also available upon meeting certain conditions.
IS – Stamp Duty, calculated over the price, or the VPT, if higher. IS tax rate is fixed in 0,8% in most frequent situations. VI.1.2. VAT (“IVA”) Under Portuguese law, real estate acquisitions are generally exempted of VAT (exceptions apply). VI.2. PROPERTY OWNERSHIP VI.2.1. PROPERTY TAX – “IMI” Owners of real estate located in Portugal, which are registered as such as of 31 December of a certain year, are subject to IMI. Nowadays, IMI reaches a variable rate between 0.3% and 0.45% for urban buildings and plots of land for construction, a fixed rate of 0.8% for rural property, and a fixed rate of 7.5% for owners’ resident in tax havens or deemed as being held or controlled by entities established therein. IMI is levied on a yearly basis and becomes payable in the following year to which it refers, upon the issuance of the tax assessment by the tax authorities. IMI must be paid: (i) in one installment, in the month of May, when its amount is equal to or less than € 100; (ii) in two instalments, in the months of May and November, when the amount is greater than € 100 and equal to or less than € 500; (iii) in three instalments, in the months of May, August and November, when the amount exceeds € 500. Additional to this tax may be applicable if
certain thresholds are exceeded. VI.2.2. PROPERTY TAX - “AIMI”
Additional to the IMI (“AIMI”) is due, among others, by the owners of urban properties, located in Portugal, intended for residential purposes and plots of land for construction.
ILN Real Estate Group – Buying and Selling Real Estate Series
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