CGT – Check-up

WHEN YOU buy or sell a property in Portugal, the notary who performs the deed is required to report the transaction to the Revenue. Stated more bluntly, if you don’t report the sale, he and the Finanças (Portuguese tax office) will come after you.

In a recent example, a ‘distracted’ taxpayer received notification of the missing transaction even before his final tax assessment was issued. He was lucky. He had only to pay a re-submission fine. Others are forced to pay penalties as well as accumulated interest that, on the larger amounts common in many home sales, can prove very costly.

Getting advice after the fact is better than none at all, but your best approach for a successful and profitable outcome is to plan carefully at the beginning, defining a long term strategy that will structure your property in the most advantageous manner to achieve your long-term goals. For example, a non-resident property owner, who had renovated a farmhouse, was only 24 hours away from a signing a deed that would have triggered a CGT assessment of 150,000 euros. Only last minute intervention permitted him to correct his residency status, enabling him to qualify for rollover relief and save the unanticipated tax bill.

The best structure

Before you buy, it is important to determine the best structure to use. For those seeking a long-term primary residence in Portugal, direct ownership is often a good solution. However, if investment is your principal purpose, a Portuguese Nominee Company may prove to be the wiser solution. Only case-by-case analysis will determine the correct answer for you.

Asking the right questions

Expecting your estate agent or lawyer to uncover the skeletons in the closet of a prospective property can be a leap of faith that may end with an unpleasant surprise. You need to know which questions to ask before you make your commitment because you, as the current owner, will be held responsible for all licensing and paperwork being up-to-date. Ignorance or lack of due diligence will not avoid fines or even eventual removal of any offending structures.

Understanding the requirements

It is crucial for a successful conclusion that you grasp the essentials of where you and your property stand under Portuguese legislation. For example, key factors such as the Property’s Rateable Value (VPT) under recently enacted legislation or determining your Marital Property Regime (are you and your spouse co-owners or joint owners?) can open or close doors of opportunity.

Plain English

As you may already know, Portugal has complex bureaucracy. All documents, forms and other paperwork are in Portuguese only and instructions are often in a jargon that even native Portuguese sometimes have trouble understanding. We put the process to you in plain English. With proper guidance, even those who speak English as a second language should have little trouble in getting off to a good start.

• Dennis Swing Greene is an International Fiscal Consultant for euroFINESCO. Private consultations can be scheduled at our offices in Guia (Albufeira) and Lisbon (Chiado).Algarve – 289 561333; Lisbon – 213 424 210 or e-mail: [email protected]. Visit