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What To Know About Portugal's Capital Gains Tax

September 29, 2022
2022-09-29
There's more to selling your property in Portugal than just dealing with the buyer. There are documents you need to show and costs you need to pay. And of the latter, the capital gains tax is the most important. It's oftentimes the final step the seller has to take to completely and finally let go of the real estate. Do you know about the capital gains tax in Portugal? Do you know how much you have to pay for it? Do you know how you can be exempt from paying it? By knowing the basics of this tax, you'll be more prepared to deal with it when the time comes.

What To Know About Portugal's Capital Gains Tax


What is Portugal's Capital Gains Tax All About?

Just like in other countries, Portugal imposes a tax on the profit you earn from selling your property. Or more specifically, it's levied on the difference between how much you earned from putting your real estate in Portugal for sale and how much you paid to acquire it in the first place. This is called the capital gains tax and it's among the most important in Portugal's tax system. It even has different versions depending on your residency status. Non-residents have to pay the capital gains tax in Portugal fairly differently from the way residents do.


Will Your Residency Status Matter?

As previously mentioned, the way residents in Portugal pay the capital gains tax is a little different compared to how non-residents will have to pay it. For starters, the tax is more generous to the former. The capital gains tax is only levied on 50% of the profit residents earn from selling their real estate in Portugal. This means that they have to pay a lot less than what non-residents have to pay. Moreover, they even get to enjoy inflation relief after two years of ownership. The only thing that non-residents have over residents is that their capital gains tax rate is fixed.

What To Know About Portugal's Capital Gains Tax



What is The Tax Rate Here?

Here in Portugal, the tax rate for the capital gains tax differs depending on your residency status. Though non-residents have to pay this tax levied on the full amount of the profit they earn, their tax rate is at a fixed 28%. For residents, on the other hand, though they only have to pay the tax that's levied on only half of their profit, their tax rates range from 14.5% to 48%. This is because it's taxed at the income scale rates, making it feel more like another form of one's income tax than a separate capital gains tax. The main principles, however, still apply.


What Can Make You Exempt from This Tax?

Can you be exempted from having to pay the capital gains tax here? The answer is yes, you can. If the real estate in Portugal that you just sold was your main residence in the country, then this exempts you from paying the tax. For residents, you're also exempt if you plan to use the profit you earned in buying a new residence in Portugal. In any case, the exemption is really more about if you lived in the property that you just sold or not. If this doesn't apply to your sale, then you have no choice but to pay the capital gains tax in Portugal.

What To Know About Portugal's Capital Gains Tax


If you're ever thinking of selling your real estate in Portugal, then you need to look out for the capital gains tax. This is one thing you have to pay to legitimize the sale and make everything official. Not to mention help you avoid legal and financial trouble!




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