Let’s talk about taxes

Out 21, 2022

For those who want to invest or live, we tell you in this article a little more about how taxes work in Portugal.

Quality of life, security, healthcare system and easy-going lifestyle are some of the main reasons that lead investors and buyers to move to Portugal. Therefore, it is also important to have a good knowledge of tax obligations to avoid unpleasant surprises.

Taxes in Portugal are divided between the following areas: income, assets, consumption, We can summarize some:

Income Tax: IRS, IRC

Property Taxes: IMT, IMI, and IS (Stamp Duty)

Consumption Tax: VAT

In this article, we will talk about the ones related to our activity, the Property Taxes : the IMT and the IS (Stamp Tax), which are the most important for you, a future investor or property buyer in Portugal.

IMT (Municipal Tax on Property Transfers)

The IMT is levied on the national transfers of property rights over real estate located in the territory and must be paid by the buyer or investor. The IMT, as a rule, is levied on the value contained in the contract or, if higher, on the taxable value of the property.

In the case of the acquisition of an urban building intended exclusively for housing, the fees are, varying according to the acquisition value, with the highest acquisition rate being 7.5%

In the case of other types of urban buildings, the rate is fixed (6.5%) and for rural buildings the rate is 5%.

IS Stamp Duty 

This tax has a fixed rate of 0,8%, and is paid on the day of the deed. 

It also will be charged in situations where the buyer will get a mortgage from a bank, and in this case he will pay 0,6% over the amount he is getting. 

When you buy a house and apply for a loan for this purpose, you will have to pay this tax in two moments: at the notary you will pay the 0,8% along with the IMY tax, and when  the loan amount becomes available in your current account, you will be deducted of the 0,6%.

IMI:

IMI is the annual tax you will have to pay to the city that will depend on the value of the property estimated by the Finance department. 

It can be divided into 3 installments to be paid by the end of May, August and November.

There is also another Tax called AIMI, which is for properties evaluated by the finance department over 600.000€, and that must be paid until the end of September of each year.

The values of this rates may vary from one council to the other.

Want to invest, buy or live in Portugal?

It is very important to be informed about all the processes and steps you will have to take.

To find out more about all the advantages of investing or living in Portugal, get in touch with our team of experts.

Maria Bravo
CEO/ PARTNER
MB CONSULTING
AMI:18422

+351 910 115 120

geral@mariabravoconsulting.com