Other taxes in Portugal
The Municipal Property Tax (IMI) is a tax that applies to the property value of real estate (rural, urban or mixed) located in Portugal, approved by virtue of Decree Law 287/2003 of 12 November, having come into force on 1 December 2003.
IMI is payable by owners, beneficiary owners or superficiary owners of real estate property at 31 December of the respective year. Under the law, real estate property includes all units of territory, including the water, plantations, buildings and all constructions of any nature that they may be in or on them permanently, providing that they are part of the assets of an individual or legal person and under normal circumstances have economic value. For the purposes of IMI, each independent unit that is part of the horizontal property regime is considered real estate property. The taxable value of real estate property is determined by an appraisal made in accordance with the IMI Code.
Rates:
The following rates apply to the taxable value of all real estate property held by the taxpayer in Portugal:
|
General Rate (%) |
IBCM Rate (%) |
|
|---|---|---|
|
Rural real estate: |
0.8 |
0.16 |
|
Appraised urban real estate |
0.3 to 0.45 |
0.06 to 0.1 |
|
Real estate owned by entities that reside in tax havens |
7.5 |
1.5 |
As of 2021, in the Autonomous Region of Madeira payment of IMI can be made via:
- 1 instalment (in May) when the amount is equal to or greater than €50;
- 2 instalments (in May and November) when the amount owed ranges between €50 and €100;
- 5 instalments (during the months of July, August, September, October and November) when the amount payable is greater than €100.
IMT - Real Estate Transfer Tax
The Real Estate Transfer Tax (IMT) was approved pursuant to DL 287/2003 of 12 November and came into force on 1 January 2004. This tax applies to the transfer of property rights or partial rights, applicable to real estate property, located on Portuguese territory, and in other cases that the law considers equivalent to real estate transfer.
Characteristics of the Real Estate Transfer Tax
Generally speaking, IMT is owed by the purchaser of the real estate property; however, there are specific rules for certain situations. The tax obligation occurs at the time when transfer of ownership takes place. IMT shall be applied to the value shown on the act or on the contract, or to the taxable value of the property, whichever is greater.
The initiative for settlement generally falls upon the taxpayers (purchasers) who can for such purposes submit a duly filled in declaration at any Tax Office.
Rates
IMT rates are as follows:
a) Urban building or independent unit used exclusively for own and permanent residence:
|
Amount (€) |
Marginal Rate (%) |
Average Rate (%) * |
|---|---|---|
|
Up to 92,407 |
0 |
0 |
|
92,407 to 126,403 |
2 |
0.5379 |
|
126,403 to 172,348 |
5 |
1.7274 |
|
From 172,348 to 287,213 |
7 |
3,8361 |
|
From 287,213 to 574,323 |
8 |
- |
|
From 574,323 to 1,000,000 |
6 (single rate) |
|
|
Greater than 1,000,000 |
7.5 (single rate) |
|
(*) Upper limit of the bracket
b) Acquisition of urban building or independent unit of an urban building exclusively used for housing, not covered by the above sub-paragraph:
|
Amount (€) |
Marginal Rate (%) |
Average Rate (%) * |
|---|---|---|
|
Up to 92,407 |
1 |
1 |
|
92,407 to 126,403 |
2 |
1.2689 |
|
126,403 to 172,348 |
5 |
2.2636 |
|
From 172,348 to 287,213 |
7 |
4.1578 |
|
From 287,213 to 550,836 |
8 |
- |
|
From 550,836 to 1,000,000 |
6 (single rate) |
|
|
Greater than 1,000,000 |
7.5 (single rate) |
|
(*) Upper limit of the bracket
When, in relation to the acquisitions referred to in sub-paragraphs a) and b) above, the amount subject to tax is greater than €92,407, it is divided into two parts: one of them being equal to the limit of the higher of the brackets it falls under, subject to the average rate of this bracket; and the other part equal to the remainder, which shall be subject to the marginal rate of the bracket that is immediately higher.
c) Acquisition of rural real estate - 5% (general regime) or 1% (IBCM);
d) Acquisition of other urban real estate and other acquisitions at a cost - 6.5% (general regime) or 1.3% (IBCM);
e) Acquisition by an entity residing in a tax haven - 10%.
Companies established within the scope of the International Business Centre of Madeira as of 2015 shall be subject to a limitation of 80% with respect to the IMT on property intended as their business premises.
Stamp duty
This is the oldest tax in Portugal and its origins date back to the 17th century. This tax applies to a broad range of economic operations. Law 150/99 of 11 September approved the Stamp Duty Code, and it has been successively amended since then.
Characteristics of stamp duty
Stamp duty applies to a series of legal acts, contracts, documents, titles, documents and other acts or situations that are listed in the General Stamp Duty Table. Given the heterogenic nature of the tax, it is necessary to consult the table in order to check whether a particular legal act is subject to this tax. It may cover multiple situations, such as rental agreements, successions and endowments, cheques, credit securities, gambling, loans, the granting of credit, guarantees and interest, among others. The tax only applies to acts that have occurred on Portuguese territory.
The entities that have an economic interest in the act shall pay the tax. If there is more than one interested party, payment shall be shared by the all the parties proportionally. Operations that are subject to VAT and not exempt from it shall not be subject to Stamp Duty.
The law also provides for application of Stamp Duty on the following:
- Documents, acts or contracts issued or signed outside of Portuguese territory under the same terms they would otherwise have been issued or signed on Portuguese territory, if submitted here for any legal purposes;
- credit operations undertaken and guarantees pledged by credit institutions, financial companies or any other entities, regardless of their nature, headquartered abroad, undertaken by affiliates or branches abroad of credit institutions, financial companies or any other entities headquartered in Portuguese territory, to any entities, regardless of their nature, domiciled in Portugal, the domicile being considered the head office, affiliate, branch or stable establishment;
- Interest, commissions and other instalments charged by credit institutions or financial companies headquartered abroad or by affiliates or branches abroad of credit institutions or financial companies headquartered in Portugal to any entities domiciled in Portugal, the domicile being considered the head office, affiliate, branch or stable establishment of the entities that participate in the transactions;
- Insurance policies that cover risk that occurs on Portuguese territory.
Taxpayers must submit a monthly declaration itemized according to each applicable fee listed in the General Table, no later than the 20th of the month that follows the one in which the tax obligation was generated.
Companies established within the scope of the International Business Centre of Madeira as of 2015 shall be subject to a limitation of 80% with respect to Stamp Duty.
