Buying a property in Portugal – Part 3

By Dra Cristina Marcelino

For many years, it was said that property was better off if registered offshore.

This meant that the real and legitimate owners would not be known to the authorities. It also meant real tax advantages in terms of inheritance tax and capital gains.

But rules have changed dramatically and for some the only way was to transfer the head of the company which owned the property to a so-called white list of countries.

The government made rates on offshore companies (black-listed) higher, up to 1% of the rateable value, instead of the normal 0.40% if registered individually.

What other taxes and costs are you going to pay if it is a company that owns the property?

After a small period of exemption, all companies are liable for company tax (IRC) although they have no activity in Portugal.

There will be a minimum of €1,000 (in two payments) for the Government.

There are also the management fees of the company, both for offshore companies and for Portuguese companies (here this will be the accountant’s fees).

Other hidden charges are likely to exist on companies for the number of tax obligations has dramatically increased over the years.

The inheritance tax from parents to children was abolished but the capital gains may still be an advantage.

It all depends on the year of purchase, consequent valuations of the property and personal and individual intentions with the property.

What we normally advise and do is an accurate evaluation of the pros and cons of both options, so that prior to the purchase you have a tailor made suit for this marriage which always is the purchase of a property.

In her monthly column, lawyer Cristina Marcelino will be presenting legal advice to readers of the Algarve Resident. In 2004, she set up her own legal practice in Lagos and since then has been dealing with different areas including private law, property matters and company and business taxes.

For any questions/comments or clarifications, please email at [email protected]