Foreign Ownership

Foreigners are permitted to own property in Portugal and are granted the same rights as Portuguese nationals. There is nothing significant that foreigners need to adhere to in purchasing Portuguese property. They are granted the same rights, obligations and restrictions as Portuguese’s and should check local government authorities for ownership issues such as taxation, restrictive covenants, etc.

Concerning the exercise of estate agency in Portugal the law established that the exercise of estate agency by companies with effective principal place of business in another State of the European Community is also subject to the provisions of the Decree-Law mentioned above (211/2004, of 20 August) whenever such activity relates to property situate in Portugal.

Land Registration System

The Land Registry has a record of property ownership, with a complete description of each property on a material, economic and fiscal level, being able any citizen to require information regarding an enrolled building in the Registry.

Thus, to analyse the “history” of the property, it is necessary to require the emission, through proper model, of a document certificate of the full record of the title and dealings regarding the property.

In the Finance Bureau, in turn, the properties are enrolled in accordance with a number. These numbers, assignment of articles, are called “matriciais”.

Through the Finances Bureaus is possible to know about the fiscal situation of a house and to know who is entity responsible for the fiscal obligations related to the property.

The document that demonstrated the fiscal situation of the property is named “Caderneta Predial”. We can have two types of Cadernetas Prediais:

• Urban Caderneta Predial;
• Rustic Caderneta Predial;

Registration of a sale follows the signing of the Escritura Pública (title deed), which must be done in front of a notary. The notary acts as a neutral public officer, charges a scale fee and is responsible for confirming and recording in the Escritura Pública that correct payment has been made. Before this stage you will normally be asked to sign a promissory contract and pay a deposit - you may forfeit the deposit if you withdraw - if the vendor withdraws he may have to compensate you. You will normally make staged payments if you are buying a property in construction. The notary does not act in the interest of you or the vendor, he is there simply to ensure that the legal process is correct.

Tax Information for Portuguese Property Owners

1. Municipal Property Tax (IMI)

The new tax on property is regulated by Decree-Law no. 287/2003, of 12 November, substituting the older Contribuição Autárquica. This is an annual municipal property tax calculated upon the patrimonial tributary value of rural and urban properties situated in the Portuguese territory.

The Municipal Property Tax rates are as follows:

Rural Properties ......................................................................0, 8%

Urban Properties appraised under the old rules: ..........................0, 4% to 0, 8%

Urban Properties appraised under the new IMI rules......................0, 2% to 0, 5%

Tax resident in an offshore owning a building in Portugal...............1 % / 2%

It is the responsibility of the municipality to define each year the applicable rate, such decision from the Municipal Board being communicated to the Directorate General for Taxation by 31st December of the year concerned. Immovable property is classified as rural, urban and mixed.

The following types of property are considered as rural:

• Property connected with, or merely having as its normal purpose, any use giving rise to agricultural income;
• Property which, although used for other purposes, is not built-in or has only buildings or construction of an accessory nature, without an economic autonomy and of a limited value;
• Property located within an urban centre that cannot be used for profitable purposes, or can only be used for agricultural purposes and is effectively used for such purpose;
• Buildings and constructions directly used for the production of agricultural income, if located in land as above referred to;
• Waters and plantations in the above mentioned situations.

There shall be classified as urban property, properties that are not classified as rural. Urban property can be divided into:

• Housing, commercial, industrial buildings or buildings designed for the exercise of an independent professional activity, being considered as such buildings or constructions licensed for that purpose, or, in the absence of a license, whose normal use is in connection with one of the above mentioned activities;
• Building land: that located inside or outside an urban centre, that has been granted a license for land-lot division, has a project approved or has been granted a building license, as well as any land that has been so declared in its acquisition deed.

There shall be classified as mixed property, property partly rural and partly urban, being not possible to classify either of them as the principal one.

Personal Scope

The taxable person is the owner, the usufructuary or the party having the use or the fruition of the property on the 31st December of the year to which the tax relates.

There shall be exempted from local real estate tax, in particular:

• Urban housing property or part thereof, constructed, enlarged, improved or purchased for the permanent residence of the owner and effectively assigned to such purpose, within six months after the purchase or completion of the construction, enlargement or improvements, except for a reason not imputable to the beneficiary thereof;
• Property or part thereof, newly constructed, enlarged or improved, or purchased, for that part designed to be rented for dwelling purposes, provided that the above conditions are met;

The exemption period in the two preceding cases shall be determined in accordance with the following Table:

2. Municipal Tax on Property Sales and Transfers (IMT)

The Municipal Tax on Property Sales and Transfers (IMT) is a local municipal tax that is levied on the transfer of real estate assets or the transfer of property rights for such assets or subdivisions of them.

This tax will be charged at a single rate of 6.5 per cent on the sale or transfer of urban property not for habitation. The single rate for rural properties is 5 per cent. However, reductions and exemptions will be considered when properties are sold or transferred for industrial or other activities of recognised economic interest to Portugal.

The tax is levied at a rate of 8% per cent whenever the purchaser has their residence or headquarters in a country, territory or region with a tax regime that is clearly more favourable. In regard to the sale or transfer of urban buildings or apartments exclusively for habitation, proper and permanent, the tax is levied at the following rates:

In regard to the sale or transfer of urban buildings or apartments exclusively for habitation, no proper or permanent, the tax is levied at the following rates:

3. Stamp Duties

Stamp duties are levied for certain legal documents, books, papers and other items. Transfers free of charge to legal heirs (gifts or inheritances to spouses, ascendants and descendants) are not taxed in Portugal.

Industry Professionals

In respect to the activity developed by Portuguese Real Estate Professionals and Agents Association (APEMIP) member’s associates, the Portuguese legislation determines that companies, which wish to operate as real estate agencies, shall obtain a license and fulfil all the legal requirements demanded. Only those who are licensed can exercise the real estate activity in Portugal.

About the International Consortium of Real Estate Associations (ICREA)

ICREA, a Consortium of the world’s leading real estate associations, is committed to the right to own and transfer real property. ICREA sets standards for international real estate practice and facilitates worldwide real estate transactions through its web site, WorldProperties.com

About APEMIP

APEMIP- Associação dos Profissionais e Empresas de Mediação Imobiliária de Portugal (Portuguese Real Estate Professionals and Agents Association) it’s a private association that represents in Portugal the real estate activity counting with around 3,500 members, out of a total of 4,000 existing accredited agents.

APEMIP, with head office in Lisbon, is represented in its Regional Boards, to be closer and better support its associates of the Northern, Central and Southern regions of the Country, also creating representation offices in the Autonomous Regions of Madeira and Azores Atlantic islands. Apart from being a reputed Association that is acknowledged by the political power bodies, APEMIP is also an association whose opinion is considered and regarded by the mass media and by the public in general.