When you decide to buy a property in Portugal, you should bear in mind that in addition to the value of the property, you will have to consider taxes and all the costs related to the purchase (IMT, IMI, ..., Notary).
Especially the IMT (Municipal Tax on Property Transfers).
IMT - What is it and how is it paid:
This is a single instalment tax, which must be settled and paid by the purchaser of the property, prior to the execution of the deed of purchase and sale.
For the settlement of this tax, it will be necessary to fill in and deliver the IMT Model 1 return at any Finance Service or on the official website of the Tax Authority (Portal das Finanças) in case the return is submitted electronically.
It should be noted that notaries always require proof of payment of this tax (as well as the Stamp Duty), and it is not possible to carry out the deed without the respective proof of payment.
The IMT is calculated on the value declared in the purchase and sale agreement (i.e., acquisition price) or on the taxable equity value (“VPT”) contained in the land register, if this is higher, and there may be cases in which the purchaser is exempt from this tax (see exemptions below).
In the case of a residential property, the amount of IMT payable depends on the following characteristics of the property:
- Purpose: Permanent housing, secondary housing, …;
- Location: Mainland or Autonomous Regions;
- Tax basis: acquisition value or VPT, if higher;
- Rate to be applied, which varies between 1% and 7.5%.
We recommend that you find out in detail from the relevant authorities about all the taxes that will be levied on your purchase or the business you are setting up.