Investor's Guide - Fiscal System - Main Taxes in Portugal

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Fiscal System 

 

6. Municipal Property Transfers Tax (“IMT”)

 

Municipal Property Transfer Tax

Imposto Municipal sobre a

Transmissão Onerosa de Imóveis (IMT)

Entry into Force

1 January 2004 (substituted the old Municipal Property Transfer Tax – Imposto Municipal de Sisa)

Tax Rates

·       Rural property: 5%; 

·       Urban property exclusively used as a permanent place of residence – range between  0% and 6%; 

·       Urban property exclusively used for residential purposes – range between  1% and 6%;

·       Urban property not exclusively used for residential purposes and other acquisitions – 6.5%; 

·       Urban and rural property acquired by a resident in a blacklisted jurisdiction – 10%;

Exemptions

·       Urban property subject to rehabilitation; 

·       Restructuring operations; 

·       Acquisition of properties for resale by qualified companies; 

·       Acquisition of real estate by open-end real estate investment funds or by closed-end of public subscription (tax rates reduced to 50%); 

·       Acquisition of buildings individually classified as of national/public/municipal interest.

Payment

Before the transfer or during the month following the transfer when executed outside the Portuguese territory.

 

6.1 Tax basis

 

Municipal Property Transfers Tax ("IMT")IMT is levied on the transfer for consideration of real estate located in the Portuguese territory. Such transfers may also be subject to Stamp Tax.  

IMT is due by the purchaser and levied on the purchase price or on the property tax value, whichever is higher. As mentioned above, property tax value is computed according to the rules foreseen in the Municipal Property Tax Code.

 

IMT extends the taxable basis to several types of legal acts which grant an economic result similar to the transfer of the ownership over a real estate, such as: 

·       The assignment of promissory agreements proceeded by the utilization of the property; 

·       Lease agreements for more than 30 years; 

·       The acquisition of 75% or more of the share capital of a company incorporated as “sociedade por quotas”, which owns real estate located in Portugal. 

·       The assignment of promissory agreements which contains clauses under the terms of which the purchaser may transfer his contractual position to third parties; 

·       The assignment of contractual position by the purchaser in promissory agreements; 

·       Irrevocable power of attorneys granted by the promissory purchaser to third parties.

 

6.2 Rates 

 

IMT is levied on the transfer for consideration of real estate located in the Portuguese territory. Such transfers may also be subject to Stamp Tax.

 

Applicable rates are the following: 

·       Rural property - 5%; 

·       Urban property exclusively used as a permanent place of residence:

 

Tax basis

Rates

Marginal

Up to € 92,407

0%

Up to € 92,407

> € 92,407 until € 126,403

2%

> € 92,407 until € 126,403

> € 126,403 until € 172,348

5%

> € 126,403 until € 172,348

> € 172,348 until € 287,213

7%

> € 172,348 until € 287,213

> € 287,213 until € 574,323

8%

> € 287,213 until € 574,323

> € 574,323

6% (single rate)

  

·       Urban property exclusively used for residential purposes:

 

Tax basis

Rates

Marginal

Up to € 92,407

0%

Up to € 92,407

> € 92,407 until € 126,403

2%

> € 92,407 until € 126,403

> € 126,403 until € 172,348

5%

> € 126,403 until € 172,348

> € 172,348 until € 287,213

7%

> € 172,348 until € 287,213

> € 287,213 until € 550,836

8%

> € 287,213 until € 550,836

> € 550,836

6% (single rate)

 

·       Urban property not exclusively used for residential purposes and other acquisitions - 6.5%; 

·       Urban and rural property acquired by a resident in a blacklisted jurisdiction - 10%.

 

6.3 Payment

  

IMT is assessed by the central tax services based on the information filed by the taxpayer, in a local tax service or by internet. It should be assessed before the transfer.

 

IMT must be paid when the tax is assessed or in the following business day. It is valid for 2 years. Whenever the transfer is executed by an agreement signed outside the Portuguese territory, IMT should be paid during the following month. When an exemption lapses, taxpayer must request IMI’s assessment in the following 30 days to the local tax services of the property and must pay the tax in the same deadline.

 

6.4 Exemptions

 

There is a list of exemptions that includes, amongst others:

   
6.4.1 Urban property subject to rehabilitation 

 

An IMT exemption is applicable to urban properties whenever the rehabilitation of the building begins within two years from the acquisition date. As set out to IMI exemption, rehabilitation should be certified by the municipality by the end of the works (or by the Residence and Urban Rehabilitation Institute, when applicable). Such municipality must communicate to the respective local service the exemption within 60 days. In the following 15 days, the local tax service must cancel previous tax assessment and refund the IMT paid.

 

As mentioned above for IMI, an additional IMT exemption is also foreseen for the first acquisition of an urban property following its rehabilitation, to be exclusively used as a place of residence, when located in a special urban rehabilitation zone. It is only applicable to properties subject to rehabilitation after 1 January 2008 and completed until 31 December 2020. The beginning and the conclusion of the construction works must be certificated by the municipality. The exemption and relevant conditions are approved by the municipal assembly.

   
6.4.2 Restructuring operations (such as mergers and demergers)

 

Upon request, the Minister of Finance may grant an exemption from IMT, Stamp Tax and legal fees to restructuring operations based in sound economic reasons. For such purpose, a request and an economic study on the advantages of the restructuring must be presented to the Minister of Finance prior to the registration of the operation.

 

If this ruling is only obtained after the operation, the abovementioned taxes will have to be paid, but reimbursement may be asked within 3 months from the ministerial authorization.

   
6.4.3 Other exemptions

 

·       Acquisition of properties for resale by real estate companies;  

·       Acquisition of real estate by open-end or by closed-end of public subscription real estate investment funds (tax rates reduced to 50%);  

·       Acquisition of buildings individually classified as of national/public/municipal interest.  

 

 

 

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