Real estate, as an immovable factor, tends to be overtaxed in most countries and Portugal is no exception. Tax structuring and optimizing is crucial to minimize total acquisition costs and maximize investment returns. RPBA’s updated presentation deals with this challenging topic incorporating the latest developments, including tax incentives on rehabilitation, the OECD Multilateral Instrument rules on “real estate rich” companies and also the brand new SIGI company (the Portuguese equivalent of the REIT – Real Estate Investment Trust).

1. The basics
Real Estate Tax Planning
in Portugal
Ricardo da Palma Borges /
Ana Rita Pereira
rita@rpba.pt
www.rpba.pt

2. Contents PAGES: PAGES:
Introduction 3
Direct or indirect purchasing of real estate
(taxation on PPT and POT)
22
Portuguese relevant taxes after the estate tax reform of
2003
4
Portuguese Tax Havens’ Blacklist, as approved by
Ministerial Order no. 292/2011, of November 8th 25
Relevant entities 5
Direct or indirect purchasing of real estate
(taxation on ST)
26
Interesting features of the Portuguese tax system –
Non-habitual resident (NHR) regime
6
Direct or indirect purchasing of real estate
(taxation on the additional to the POT)
27
Interesting features of the Portuguese tax system –
Capital gains on shares/quotas
9 Direct sale of real estate – “asset deal” (CGT) 30
Interesting features of the Portuguese tax system –
Capital gains on real estate and the PIT reinvestment regime
10 Gift of real estate – “asset deal” (ST / CIT) 31
Interesting features of the Portuguese tax system – GIT 11 Indirect sale of real estate – “share deal” (CGT) 32
Interesting features of the Portuguese tax system –
Tax Incentives for Urban Rehabilitation
13
Gift of the interest in the company –
“share deal” (ST / CIT)
34
Real Estate Investment Fund (FII) –
Legal regime, taxation and benefits
16
Change of the beneficial owner of the fiduciary structure
(CGT)
36
Real Estate Investment Company (SIGI) –
Legal regime, taxation and benefits
18
Change of the beneficial owner of the fiduciary structure
by gift (ST)
37
Other legal entities (namely, commercial companies) –
taxation and benefits on PTT and POT
19 Real Estate Tax Planning in Portugal 38
Other legal entities (namely, commercial companies) –
taxation on CIT and PIT
21

3. Introduction
Real estate, as an immovable factor, tends to be
overtaxed in most countries and Portugal is no
exception. Tax structuring and optimizing is
crucial to minimize total acquisition costs and
maximize investment returns.
This presentation deals with this challenging
topic incorporating the latest developments,
including tax incentives on rehabilitation, the
OECD Multilateral Instrument rules on “real
estate rich” companies and also the brand new
SIGI company (the Portuguese equivalent of the
REIT – Real Estate Investment Trust).
3

4. Portuguese relevant taxes after the estate tax reform of
2003
− Previously Imposto Municipal de Sisa;
− Currently Imposto Municipal sobre as Transmissões Onerosas de
Imóveis;
Property Transfer Tax
(PTT)
− Previously Contribuição Autárquica;
− Currently Imposto Municipal sobre Imóveis;
Property Ownership Tax
(POT)
− Previously Imposto sobre as Sucessões e Doações;
− Currently Stamp Tax (individuals) or Corporate Income Tax (corporate
entities);
Gift and Inheritance Tax
(GIT)
− Imposto do Selo;
Stamp Tax
(ST)
− Part of Personal Income Tax (PIT) or Corporate Income Tax (CIT).
Capital Gains Tax
(CGT)
4

5. Relevant entities
5
Joint stock company / corporation or
Portuguese sociedade anónima
(commercial company)
Private limited company or
Portuguese sociedade por quotas
(commercial company)
Real Estate Investment Fund or
Portuguese Fundo de Investimento
Imobiliário (FII)
Real Estate Investment Company or
Portuguese Sociedade de
Investimento e Gestão Imobiliária
(SIGI)

6. Interesting features of the Portuguese tax system –
Non-habitual resident (NHR) regime
▪ A favorable PIT regime for non-habitual tax residents (NHR) has been introduced in 2008, under which those acquiring
a Portuguese tax residence without having one in the previous 5 years are granted, for a 10-year period:
• The exemption method to avoid double taxation regarding foreign source income;
• An autonomous (rather than progressive) taxation of dependent and independent work income from high value-
added activities of a scientific, artistic or technical nature (as defined by a Ministerial Order) and pension income.
6

7. ▪ Under this regime, foreign income is exempt, provided that it is taxed abroad (in the case of dependent work income)
or that it may be taxed abroad under a double tax treaty entered into by Portugal or according to the OECD Model Tax
Convention and taking into account the reservations to the Model and the observations to its Commentary submitted
by Portugal, in the cases where no double tax treaty exists and provided that the Source State is not a blacklisted
jurisdiction for Portuguese tax purposes (for all other categories of income, except independent work income, which
must additionally derive from the mentioned high value-added activities in order to qualify for the exemption).
▪ Dependent and independent work income from high value-added activities is taxed at a 20% autonomous rate
(regardless of its domestic or foreign source, which means that the rate may apply to foreign income not qualifying for
the above-mentioned exemptions).
▪ Foreign sourced pension is taxed at a 10% autonomous tax rate.
Interesting features of the Portuguese tax system –
Non-habitual resident (NHR) regime (cont.)
7

8. 8
Interesting features of the Portuguese tax system –
Non-habitual resident (NHR) regime (cont.)
You can also visit our microsite
www.nonhabitualtaxresident.com
or scan the above QR code with your smartphone
▪ For more information on this regime please read our presentation:
www.slideshare.net/RPBA/rpba-the-portuguese-nonhabitual-tax-
resident-regime-a-detailed-guide-on-the-nhr-tax-rules
▪ Should you require in-depth information on this subject please check
our Information Note available at: www.slideshare.net/RPBA/rpba-
newsletter-the-portuguese-nonhabitual-tax-resident-regime-
251020995

9. 9
▪ Exclusion from taxation of shares or quotas in Joint Stock Companies / Private Limited Companies acquired previously
to January 1st 1989 (regardless of the holding of real estate by the company)
▪ Portuguese companies or also foreign equivalent companies?
▪ Ubi lex non distinguit nec nos distinguere debemos:
• Silence of the law;
• EU and tax treaty principle of non-discrimination.
▪ Therefore, some foreign wealthy individuals have moved to Portugal and acquired residency herein before disposing
of their investment empires acquired prior to 1989 tax-free.
Interesting features of the Portuguese tax system –
Capital gains on shares/quotas

10. 10
▪ Exclusion from taxation of real estate (except urban plots) acquired previously to January 1st 1989.
▪ PIT capital gains on the sale of a Portuguese taxpayer's personal and permanent residence are not taxable, insofar as the sale
proceeds are reinvested in another personal residence in the Portuguese, European Union or European Economic Area
territory. It will be also necessary to fulfil all the requirements of the PIT reinvestment regime (in terms of deadlines and
administrative procedures).
▪ Alternatively, those sale proceeds may be reinvested in contributions to the public capitalization regime or in a life insurance
policy / open pension fund that generates periodic payments, insofar as the taxpayer, or the spouse, or civil partner, is at
least age 65 or retired. It is also necessary, for the investment made from 2021 onwards, that it aims exclusively to provide to
the acquirer, or his spouse, or civil partner, a regular periodic payment during a period of 10 years or more, with a maximum
annual amount equal to 7,5% of the amount invested.
Interesting features of the Portuguese tax system – Capital
gains on real estate and the PIT reinvestment regime

11. 11
▪ From January 1st 2004, “Close Family” (spouses, civil law partners – since 2009 -, children, grandchildren, parents and
grandparents) is exempt from GIT.
▪ Non-exempt situations of disposal of most Portuguese assets with individuals as beneficiaries are taxed through a 10% ST
[with the notable exceptions of (i) shares in companies whose head-office, effective management or permanent
establishment is in the Portuguese territory, and (ii) credit and other patrimonial rights over individuals or companies
resident, with head-office, effective management or a permanent establishment herein, in both cases, (i) and (ii), when the
individual beneficiaries are non-Portuguese residents; these two situations are not liable to GIT].
▪ Situations involving disposal of non-Portuguese assets with individuals as beneficiaries are not liable to GIT.
▪ Donations to corporate entities are income for CIT purposes.
Interesting features of the Portuguese tax system –
GIT

12. 12
Interesting features of the Portuguese tax system –
GIT (cont.)
Real estate
Located in Portugal
Beneficiary - close
family
0% 0.8%
Beneficiary - others 10% 10.8%
Not located in Portugal
Beneficiary – close
family
0% 0%
Beneficiary - others 0% 0%
Shares/quotas
Company with head office, effective management or
permanente establishment in Portugal, in any case, when
the individual beneficiary is tax resident in Portugal
Beneficiary – close
family
0% 0%
Beneficiary - others 10% 10%
Company without head office, effective management or
permanente establishment in Portugal, when the
individual beneficiary is non tax resident in Portugal
Beneficiary – close
family
0% 0%
Beneficiary - others 0% 0%
Inheritance Gift

13. 13
▪ PIT benefits for Portuguese tax residents:
a. The owner of the real estate can deduct 30% of the expenses incurred – up to 500€ – in order to rehabilitate the property. Such
costs must be proven and depend on prior certification. Consider i. or ii. below;
b. Rental income derived from rehabilitated real estate is taxed via an autonomous rate of 5%. Consider i. or ii. below;
c. Capital gains fully derived from the disposal of rehabilitated real estate are taxed via an autonomous rate of 5%. Consider i.
below.
▪ Further requirements and notes:
i. The real estate must be in “urban rehabilitation areas” – special regions designated under the Legal Regime of Urban
Rehabilitation - or must have been built more than 30 years ago;
ii. The real estate must be rented and subject to the phased update of rent according to the NRAU regime. The benefits are
granted on the condition that (a) either the rehabilitation work increases the preservation state of the real estate at least two
levels above the pre-rehabilitation state, (b) or that it achieves the minimum level of preservation state “good”, as long as the
construction work done in the previous two years amounts to 25% of the real estate tax value (Valor Patrimonial Tributário or
VPT) and it is meant to be leased as a permanent residence. These “works of urban rehabilitation”, defined under the Legal
Regime of Urban Rehabilitation, must be verified by the local municipality before and after the rehabilitation.
Interesting features of the Portuguese tax system –
Tax Incentives for Urban Rehabilitation

14. 14
▪ VAT benefits:
- Works of urban rehabilitation, defined under the specific Legal Regime, benefit from a reduced VAT rate of 6%, instead of the general
rate of 23%
▪ Further requirements and notes:
- The real estate must be in “urban rehabilitation areas” – special regions designated under the Legal Regime of Urban Rehabilitation -
or must have been built more than 30 years ago.
Interesting features of the Portuguese tax system –
Tax Incentives for Urban Rehabilitation (cont.)

15. 15
▪ PTT benefits:
a. Rehabilitated real estate is exempt from PTT in the first transaction after the rehabilitation, if the property is meant exclusively to be
leased as a permanent residence. Also if the property is meant for permanent residence when the real estate is in “urban rehabilitation
areas”. Consider i., ii., and iv. below;
b. Purchases of urban property meant to be rehabilitated are exempt from PTT, if such works of rehabilitation commence within 3 years
from the date of acquisition. Consider i., ii., and iv. below.
▪ POT benefits:
Rehabilitated urban property is exempt from POT for a 3-year period, renewable for an additional period of 5 years. Consider i., ii., iii., and
iv. below.
▪ Further requirements and notes:
i. The real estate must be in “urban rehabilitation areas” – special regions designated under the Legal Regime of Urban Rehabilitation –, or
must have been built more than 30 years ago;
ii. The benefits are granted on the conditions that the rehabilitation work, under the Legal Regime of Urban Rehabilitation, increases the
preservation state of the real estate at least two levels above the pre-rehabilitation state, that it achieves the minimum level of
preservation state “good”, and that it complies with requirements of energy efficiency end thermal quality;
iii. The renewal of the POT exemption is dependent on a deliberation by the Municipal Assembly.
iv. The exemption is granted after the completion of the rehabilitation work.
Interesting features of the Portuguese tax system –
Tax Incentives for Urban Rehabilitation (cont.)

16. 16
▪ Assets of investment fund: (i) urban real estate property or similar rights; (ii) rural or mixed real estate and
exploitation rights on immovable property; (iii) real estate companies (with conditions); (iv) participating units in other
FIIs (with conditions); and (v) derivatives which aim to hedge the underlying risks of the FII assets.
▪ Assets with liens that excessively complicate their disposal cannot integrate the property of the FII, namely assets
given as collateral.
▪ Closed-end funds:
i. real estate and like-assets cannot be lower than 2/3 of total assets;
ii. construction projects cannot be more than 50% of total assets (60% for reconstruction);
iii. any immovable cannot represent more than 25% of total assets;
iv. the value of leased properties cannot be more than 25% of total assets;
v. indebtedness cannot be more than 33% of total assets;
vi. participation in real estate companies cannot exceed more than 25% of total assets.
Real Estate Investment Fund (FII) –
Legal regime, taxation and benefits

17. 17
▪ Advantageous CIT regime, in which capital gains, rental income and capital income are not accounted for the
determination of the taxable income, apart from the case in which this income relates to a blacklisted offshore
company; 21% CIT rate on taxable income; no withholding taxes on the income received by the FII; No POT and PTT
exemptions (PTT exemption ceased in 2019).
▪ No Municipal or State Surcharge.
▪ ST is due on the net global value of the FII at a 0,0125% rate, on a quarterly basis.
▪ At the investor level, low taxation for non-Portuguese tax residents without permanent establishment:
• 10% rate on income distributions and capital gains (arguably, provisions of double tax treaties may prevent even
this low taxation); 35% rate for investors in blacklisted offshore territory; 25% rate if the foreign investor is
indirectly controlled by a resident and there is no information exchange between tax authorities.
Real Estate Investment Fund (FII) –
Legal regime, taxation and benefits (cont.)

18. 18
▪ Joint stock company with a minimum share capital of € 5.000.000.
▪ SIGIs main activities are restricted to:
• acquisition of property rights, surface rights and other similar rights over properties, shops or offices, for rental purposes or
other similar economic activity. This includes acquiring rural properties that can be used as a full-functional agricultural or
forestry undertaking, rural properties that are transformed into urban properties within three years after acquisition, as well as
carrying out construction and urban renovation projects;
• acquisition of shares in other SIGIs located in Portugal or in the EU or EEE, or units in FII, complying with certain criteria.
▪ Requirements that must be respected:
i. after the 2nd year, real estate and like-assets (free of liens) cannot be lower than 80% of total assets;
ii. after the 2nd year, rented properties must represent at least 75% of total assets;
iii. assets must be kept for a minimum period of 3 years;
iv. upon sale, at least 75% of the net proceeds must be reinvested;
v. indebtedness cannot be more than 60% of total assets.
▪ SIGIs must distribute the following income as dividends: 90% of the profits resulting from the payment of dividends deriving
from holdings or other investment vehicles; and 75% of the remaining profits.
▪ Same advantageous tax regime as FII applies.
Real Estate Investment Company (SIGI) –
Legal regime, taxation and benefits

19. 19
▪ Real Estate Inventory or Compra de Imóveis para Revenda (“CIR”) tax status is available for individual enterpreneurs,
Portuguese commercial companies or branches of foreign companies which, in principle:
• are inscribed as such in the tax office;
• declare the “purchase for resale” in the public deed of acquisition;
• have the “purchase for resale” as an entrepreneurial activity (set in the social object, in case of a commercial
company);
• register the real estate as inventory (not as a fixed asset) in their accounts;
• realize the resale in three years, provided that the purchaser does not resell the real estate.
▪ CIR provides a PTT upfront exemption on the purchase (if a previous “purchase for resale” has been made in the
previous year), or a refund of PTT paid upon resale (otherwise).
Other legal entities (namely, commercial companies) –
taxation and benefits on PTT and POT

20. 20
▪ CIR defers / exempts the real estate from POT during 3 years in case of purchase for resale.
▪ Possibility of cumulating a POT deferral / exemption during 4 years for plot construction if the enterprise has such an
activity (set in the social object, in case of a commercial company) and a subsequent POT deferral / exemption of 3
years on the sale of the built real estate;
▪ Since 2021 - the POT deferral / exemption is not applicable to:
• A taxpayer with a tax residence in a country, territory or region subject to a more favorable tax regime, included in
the list approved by an Order of the Finance Minister;
• An entity dominated or controlled, directly or indirectly, by an entity with a tax residence in a country, territory or
region subject to a more favorable tax regime, included in the list approved by an Order of the Finance Minister –
Portuguese Tax Authorities will have to prove the absence of valid commercial reasons or tax avoidance?
Other legal entities (namely, commercial companies) –
taxation and benefits on PTT and POT (cont.)

21. 21
▪ CIT rates: 21% on lease, local accommodation, resale or development, in the case of a Portuguese commercial
company or branch, plus up to 1,5% of Municipal Surcharge (total 22,5%) and 3%, 5% or 9% of State Surcharge
(on taxable income in excess of € 1.500.000, € 7.500.000 and € 35.000.000, respectively); Companies certified as
small or medium: tax rate of 17% for the first € 25.000 of taxable income;
▪ PIT progressive rates: 0%-48% (the higher bracket being applicable to income above € 80.882) in the case of an
entrepreneurial activity (plus an additional solidarity rate of 2,5% on income in excess of € 80.000 and of 5% on
income in excess of € 250.000);
▪ It is possible to opt for the simplified regime, under certain conditions established in the CIT and PIT Codes.
▪ Commercial companies with low management and maintenance costs; high flexibility.
Other legal entities (namely, commercial companies) –
taxation on CIT and PIT

22. 22
▪ PPT up to 1 000 000 € with a rate of 6%, and above 1 000 0000€ with a rate of 7,5% (for permanent
housing or housing purposes), or up to 6,5% (non housing purposes).
▪ Possibility of exemption if acquisition for permanent housing purposes (if the taxable value does not
exceed € 92.407). Possibility of reduction of tax rates in the acquisitions for permanent housing or housing
purposes.
▪ POT of 0,8% for rural real estate, and between 0,3%-0,45% for urban real estate.
‒ Exemption during 3 years for permanent housing if the taxable value does not exceed € 125.000 for
households with a IRS taxable income not higher than € 153.300.
Direct or indirect purchasing of real estate
(taxation on PPT and POT)

23. 23
▪ If share/quotaholders (individual Portuguese or foreign residents, or corporate Portuguese or foreign residents) sell
the interest in the Portuguese company (that owns real estate):
• Until 2021: PTT was due on the sale of a Lda. (when one of the quotaholders obtained 75% of the capital or the
number of holders was reduced to 2, husband and wife or civil law partners. so, 74% / 26% Lda. ownership
structures were common);
• After 2021: PTT is due on the sale of a Lda. or S.A., provided that cumulatively:
‒ The value of the company's assets results, directly or indirectly, in more than 50% of real estate located in
the Portuguese territory, considering the balance sheet value or, if higher, the VPT;
‒ The real estate is not directly related to an agricultural, industrial or commercial activity, excluding the
purchase and sale of real estate;
‒ One of the holders obtains 75% of the capital or the number of holders is reduced to 2, husband and wife or
civil law partners.
Direct or indirect purchasing of real estate
(taxation on PPT and POT) (cont.)

24. 24
▪ Numerous punitive measures on acquisition and holding of Portuguese real estate by a blacklisted offshore company –
namely:
▪ a PPT rate of 10% - an exemption or reduction of rates does not apply whenever the purchaser: (i) has tax residence in a
country, territory or region subject to a more favorable tax regime, included in a list approved by Order of the Finance
Minister; or (ii) is an entity dominated or controlled, directly or indirectly, by an entity with a tax domicile in a country,
territory or region subject to a more favorable tax regime, included in a list approved by an Order of the Finance
Minister - Portuguese Tax Authorities will have to prove the absence of valid commercial reasons or tax avoidance?;
▪ a POT rate of 7,5% - for (i) taxpayers with tax domicile in a country, territory or region subject to a more favorable tax
regime, included in a list approved by an Order of the Finance Minister; or (ii) an entity dominated or controlled, directly
or indirectly, by an entity with a tax domicile in a country, territory or region subject to a more favorable tax regime,
included in a list approved by an Order of the Finance Minister - Portuguese Tax Authorities will have to prove the
absence of valid commercial reasons or tax avoidance?.
Direct or indirect purchasing of real estate
(taxation on PPT and POT) (cont.)

25. 25
Portuguese Tax Havens’ Blacklist, as approved by
Ministerial Order no. 292/2011, of November 8th
Jurisdictions in yellow have entered Double Taxation Conventions with Portugal, that are in force
Anguilla Guyana Puerto Rico
Antigua and Barbuda Honduras Qatar
The Netherlands Antilles Hong Kong The Solomon Islands
Aruba Jamaica American Samoa
Ascension Jordan Samoa
The Bahamas The Queshm Island St. Helena
Bahrain Kiribati St. Lucia
Barbados Kuwait St. Kitts-Nevis
Belize Labuan San Marino
Bermuda Lebanon St. Pierre and Miguelon
Bolivia Liberia St. Vincent and the Grenadines
Brunei Liechtenstein The Seychelles
The Channel Islands (Alderney, Guernsey, Jersey, Great Sark,
Herm, Little Sark, Brechou, Jethou and Lihou)
The Maldives Swaziland
The Isle of Man Svalbard Islands (Spitsbergen archipelago and the Bjornoya
island)
The Northern Marianas Islands
The Cayman Islands The Marshall Islands Tokelau
The Cocos o Keeling Islands Mauritius Tonga
The Cook Islands Monaco Trinidad and Tobago
Costa Rica Montserrat Tristão da Cunha Island
Djibouti Nauru Turks and Caicos Islands
Dominica Natal Tuvalu
United Arab Emirates Niue Uruguay
The Falkland Islands Norfolk Island Vanuatu
Fiji Oman The British Virgin Islands
Gambia Palau The U.S. Virgin Islands
Grenada Panama Yemen
Gibraltar Pitcairn Island
“Other Pacific Islands not specifically mentioned”
Guam French Polynesia

26. 26
▪ ST of 0,8% on the price or taxable value of the real estate (whichever is higher);
▪ ST on 5 or more-year term financing of 0,6%, but exemption applies to interest paid on permanent
housing loans;
▪ The State Budget Law for 2017 enacted, in substitution of the 1% “Luxury” ST on housing real estate with a
taxable value above € 1 million, an Additional to the POT.
Direct or indirect purchasing of real estate
(taxation on ST)

27. 27
▪ This new Additional to the POT applies to owners, usufructuaries or superficiaries, of urban property or urban plots for housing
purposes, located in Portugal, on January 1st of the relevant year.
▪ Single owners with residential real estate or land for construction in Portugal above € 600.000 of taxable value ("Valor Patrimonial
Tributário" or VPT) are liable to Additional to the POT at a 0,7% rate on the surplus of the € 600.000. If the sum of the taxable values
exceeds € 1.000.000, the surplus is subject to a marginal rate of 1%. If the sum of the taxable values exceeds € 2.000.000, the surplus
is subject to a marginal rate of 1,5%.
▪ Single owners which are married or in a civil partnership and choose the joint taxation regime – for purposes of the Additional to the
POT – are only liable to Additional to the POT if the sum of the taxable value of their real estate is above € 1.200,000. The Additional
to the POT applies a 0,7% rate on the surplus of the € 1.200,000. If the sum of the taxable values exceeds € 2.000,000 the surplus is
subject to a marginal rate of 1%. If the sum of the taxable values exceeds € 4.000,000 the surplus is subject to a marginal rate of
1,5%.
▪ If the taxpayers obtain income attributable to immovable property subject to the Additional to the POT, the latter may be deducted
from the IRS due in respect of rental income (Schedule F) or business income obtained from rental or hosting activities (Schedule B).
Direct or indirect purchasing of real estate
(taxation on the additional to the POT)

28. 28
▪ If a company holds real estate, the Additional to the POT rate will be applied on the full taxable value of the real estate at a rate of
0,4% – not only on the surplus of a threshold. Lessors cannot charge the Additional to the POT to lessees if the sum of the taxable
values does not exceed € 600.000.
▪ If the owner is a company and the real estate is simply used by its shareholder/director or any member of the corporate bodies of
such company (including their respective spouses, ascendants or descendants), the tax rate will be of 0,7% on its full taxable value. If
the sum of their taxable values exceeds € 1.000.000 the surplus is subject to a marginal rate of 1%. If the sum of the taxable values
exceeds € 2.000.000, the surplus is subject to a marginal rate of 1,5%. In our opinion, if the real estate is leased by the company to
the shareholder or director the tax rate can be of 0,4%.
▪ Taxpayers may choose for CIT purposes: (i) to deduct the Additional to the POT as an expense; or (ii) to deduct the Additional to the
POT from the tax due, limited to the fraction corresponding to the income generated by that real estate, in the context of rental or
hosting activities, and up to that tax due.
▪ Numerous punitive measures on acquisition and holding of Portuguese real estate by a blacklisted offshore company – namely,
Additional to the POT rate of 7,5% on the sum of the taxable values of the real estate, without possibility of deducting the charge for
CIT purposes.
Direct or indirect purchasing of real estate
(taxation on the additional to the POT) (cont.)

29. 29
Direct or indirect purchasing of real estate
(taxation on the additional to the POT) (cont.)
Taxpayer Tax rate Taxable value Additional to the POT
Company 0,40% 800.000,00 € 3.200,00 €
Company (half of real estate is simply used by its shareholder/director or any other
member of the corporate bodies of such company, including their respective
spouses, ascendants or descendants)
0,40% 400.000,00 € 1.600,00 € 4.400,00 €
0,70% 400.000,00 € 2.800,00 €
Company (one third of real estate is simply used by its shareholder/director or any
other member of the corporate bodies of such company, including their respective
spouses, ascendants or descendants)
0,40% 533.333,33 € 2.133,33 €
4.000,00 €
0,70% 266.666,67 € 1.866,67 €
Company (100% of real estate is simply used by its shareholder/director or any
other member of the corporate bodies of such company, including their respective
spouses, ascendants or descendants)
0,70% 800.000,00 € 5.600,00 €
Undivided inheritance 0,70% 200.000,00 € 1.400,00 €
Single owner
Married or in a civil partnership (choose
for the joint taxation regime)
0,70% - € - €
Not married 0,70% 200.000,00 € 1.400,00 €

30. 30
▪ CIT CGT: at a 21% rate (which may be reduced to 10,5% in case of qualifying reinvestment), plus Municipal surcharge
up to 1,5%, and State surcharge of 3%, 5% or 9% (on taxable income in excess of € 1.500.000, € 7.500.000 and €
35.000.000, respectively), if a Portuguese company or a permanent establishment in Portugal holds the real estate; or
at a 25% rate if a non-Portuguese company without a permanent establishment herein holds the real estate;
▪ PIT CGT: 0%-48% (the higher bracket being applicable to income above € 80.882) in the case of a resident individual,
but only 50% of the capital gain is subject to tax (plus an additional solidarity rate of 2,5% on income in excess of €
80.000 and of 5% on income in excess of € 250.000); or at a 28% rate if a non-Portuguese resident individual holds the
real estate (only 50% of the capital gain is subject to tax, according to the Portuguese Administrative High Court and
EU Court of Justice recent decisions); or at a 35% rate if the real estate is held by an entity in a blacklisted offshore
territory (but there is one arbitration court case that concludes that the 28% rate and 50% gain basis should also
apply).
Direct sale of real estate – “asset deal” (CGT)

31. 31
▪ The free transfer by gift of Portuguese real estate:
• to an individual is liable to ST [at a 10% rate; close family (spouses, children, grandchildren, parents and
grandparents), is exempt from this 10% rate] - plus a ST of 0,8%;
• to (i) a Portuguese or (ii) non-Portuguese tax resident company or (iii) to a permanent establishment in Portugal,
is liable to CIT [at a 21% rate, plus Municipal and State surcharges in the cases (i) and (iii), and at a 25% rate in
case (ii)].
▪ Gift will give rise to a new date of acquisition. The acquisition value for future CGT purposes will be:
• under the PIT Code, the taxable value for ST purposes (i.e. Valor Patrimonial Tributário or VPT);
• under the CIT Code, the fair market value.
Gift of real estate – “asset deal” (ST / CIT)

32. 32
▪ If share/quotaholders (individual Portuguese or foreign residents, or corporate Portuguese or foreign residents) sell
the interest in the Portuguese company:
- The latter is an S.A. or a Lda., and shares or quotas were acquired before January 1st 1989: no CGT is due;
- The latter is an S.A. and shares have been acquired before January 1st 2002 (under some interpretations, although
there are two tax arbitration court decisions stating that this specific exemption is no longer in force): no CGT is due.
▪ Other situations on the sale of the interest in the company (S.A. or Lda.):
- 28% PIT CGT (computed on half-income if the company is not listed and is a micro or small company);
- (i) a Portuguese or (ii) a non-Portuguese tax resident company or (iii) a permanent establishment in Portugal, is liable
to CIT CGT [at a 21% rate, plus Municipal and State surcharges in the cases (i) and (iii), and at a 25% rate in case (ii)].
Indirect sale of real estate – “share deal” (CGT)

33. ▪ The Portuguese Sate Budget Law for 2018 has introduced new rules on the Portuguese domestic taxation of CGT
derived by non-Portuguese tax residents with shares or similar interests in non-Portuguese tax resident entities
(whose value derives principally, directly or indirectly, in more than 50%, from immovable property located in
Portugal, and if such relevant value threshold is met at any time during the 365 days preceding the sale).
▪ Tax treaties entered into by Portugal generally follow the OECD Model Tax Convention. Under these, Portugal usually
has the right to tax capital gains on the sale of real estate rich companies with Portuguese real estate (with the main
exceptions being the Netherlands, Belgium, Luxembourg and United Kingdom) .
On these two topics, see our Information Note:
www.slideshare.net/RPBA/taxation-of-capital-gains-from-the-alienation-of-shares-or-similar-interests-of-entities-
deriving-their-value-principally-from-immovable-property-located-in-portugal-05042018
Indirect sale of real estate – “share deal” (CGT) (cont.)
33

34. 34
▪ If share/quotaholders (Portuguese resident or non-resident, individual or corporate) free transfer the interest in the
Portuguese company by gift:
• to close family which are Portuguese resident (spouses, children, grandchildren, parents and grandparents), an
exemption from ST applies;
• to a beneficiary individual non-resident in Portugal - no ST is due;
• to other beneficiary individuals which are Portuguese resident a 10% ST rate applies on the taxable value;
• to a beneficiary which is a Portuguese company, a permanent establishment in Portugal of a non-Portuguese tax
resident company, or even such last company in the absence of a permanent establishment – CIT is due at a 21%
rate, plus Municipal and State surcharges if the beneficiary is a Portuguese company or a permanent
establishment; or CT is due at a 25% rate when the beneficiary is a non-Portuguese tax resident company without
a permanent establishment herein.
Gift of the interest in the company –
“share deal” (ST / CIT)

35. 35
▪ The free transfer by gift of a foreign company, even if its effective management is not in Portugal and there is no
permanent establishment herein, but whose assets are predominantly composed by rights over real estate in
Portugal, is subject to CIT if the beneficiary is a Portuguese company, a permanent establishment in Portugal of a non-
Portuguese tax resident company or even such last company in the absence of a permanent establishment (at a 21%
rate, plus Municipal and State surcharges if the beneficiary is a Portuguese company or a permanent establishment; or
at a 25% rate when the beneficiary is a non-Portuguese tax resident company without a permanent establishment
herein).
▪ The free transfer by gift of a foreign company, even if the holders are individuals Portuguese tax residents, is not liable
to ST (assuming its effective management is not in Portugal and that the real estate is not a permanent establishment
of the company), if the beneficiary is an individual which is not tax resident in Portugal.
Gift of the interest in the company –
“share deal” (ST / CIT) (cont.)

36. 36
▪ Portuguese CGT applies, since January 1st 2015, to gains in the case of partition, liquidation, revocation or extinction
attributed to beneficiaries who are Portuguese tax residents and who were founders in fiduciary structures.
▪ For founders / settlors who are non-Portuguese tax residents:
• If the effective management of the fiduciary structure is not in Portugal (e.g. non-Portuguese resident directors
and share/quotaholders or members/partners are used at the level of the foreign company and a foreign trust
law and trustees are used) CGT can eventually be due even if the disposal is made by changing the beneficial
owner in the fiduciary structures by the former founder / settlor / beneficiary.
Change of the beneficial owner of the fiduciary structure
(CGT)

37. 37
The free transfer by gift of the beneficial ownership of a fiduciary structure:
• encompassing a Portuguese company (e.g. non-Portuguese resident share/quotaholders or members/partners
are used at the level of the company and a foreign trust law and trustees are used) may not be territorially liable
to ST (tax rate of 10%), even if the beneficiary is a Portuguese tax resident individual, but this will depend on the
type of fiduciary structure;
• encompassing a foreign company whose effective management is not in Portugal (e.g. non-Portuguese resident
directors and share/quotaholders or members/partners are used at the level of the company and a foreign trust
law and trustees are used) and which has no permanent establishment herein (namely because the real estate
does not constitute one) is not territorially liable to ST (tax rate of 10%), if the beneficiary is an individual which is
not tax resident in Portugal. If the beneficiary is a Portuguese tax resident individual in principle the free transfer
will still not be territorially liable to ST, but this will depend on the type of fiduciary structure.
Change of the beneficial owner of the fiduciary structure
by gift (ST)

38. Real Estate Tax Planning
in Portugal
Proper legal advice is recommended before any
decision is taken on this subject. RPBA has an in-
depth knowledge and expertise on real estate
transactions and taxation.
Should you require further information on this
issue, want to book a consultation or obtain our
professional fees on this subject please e-mail us
(Ana Rita Pereira): rita@rpba.pt.
38

39. ▪ Chambers & Partners – Ricardo Band 1 / RPBA Band 3 (2022 / 2021) | Ricardo Band 2 / RPBA Band 3 (2020 / 2019 / 2018 / 2017 / 2016) | Ricardo Band 1 / RPBA Band 3 (2015 / 2014 /
2013) | Ricardo highlighted in Band 1 in the Private Wealth Law practice area of the High Net Worth (HNW) guide (2020 / 2019 / 2018)
▪ Legal 500 – Ricardo Recommended Lawyer / RPBA Band 2 (2021 / 2020 / 2019 / 2018) | RPBA Band 3 (2017 / 2016 / 2015 / 2014 / 2013)
▪ Best Lawyers – Ricardo recognised as "Tax Law Lawyer of the Year” (2017) and ranked under the "Tax Law" practice area and the "Tax Planning" subspecialty (2022 / 2021 / 2020 / 2029
/ 2018 / 2017 / 2016 / 2015 / 2014 / 2013 / 2012 / 2011) | Ana Isabel Correia recognised as "Tax Law Lawyer of the Year” (2020) and ranked under the "Tax Law" practice area (2022 /
2021 / 2020 /2019) | Ana Rita Pereira ranked under the "Tax Law" practice area (2022) | RPBA Tax Law Firm of the Year in Portugal (2020)
▪ Who’s Who Legal – Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2021 / 2020 / 2019 / 2018 / 2017 / 2016 / 2013) / Ricardo recognised as a top lawyer in the
Private Client practice area (2020 / 2019 / 2018 / 2017)
▪ International Tax Review – Ana Rita Pereira included in the Women in Tax Leaders guide (2021 / 2020 / 2019 / 2018 / 2017)
▪ ITR World Tax – Ricardo, Ana Isabel and Ana Rita included in the Tax Controversy Leaders guide (2022 / 2021 / 2020 / 2019 / 2018 / 2017) | RPBA Tier 1 (2022) for “Private Client” and
RPBA Tier 2 (2022) for “General Corporate Tax”, “Tax Controversy” and “Indirect Tax” | RPBA Tier 2 (2021 / 2020 / 2019 / 2018) | RPBA Tier 3 (2017 / 2016 / 2015 / 2014) | RPBA Tier 4
(2013 / 2012 / 2011)
▪ ITR World Transfer Pricing – Ricardo mentioned / RPBA Tier 3 (2022 / 2021 / 2020 / 2019 / 2018 / 2017 / 2016 / 2015 / 2014) Leaders League – RPBA mentioned as “Excellent” (2021)
▪ Leaders League – RPBA and Ricardo mentioned as “Excellent” under the "Corporate Tax" practice area (2022 / 2021)
▪ Corporate LiveWire – Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year – Portugal (2017) / Ricardo da Palma Borges chosen as the winner
of the Finance Award for Excellence in Tax Planning – Portugal (2016)
▪ Global Law Experts - RPBA Boutique Tax Law Firm of the Year in Portugal (2017 / 2015) / RPBA Tax Law Firm of the Year in Portugal (2016)
▪ Expert Guides – Ricardo ranked as a top lawyer in the Tax Lawyers directory (2020 / 2019 / 2018 / 2017 / 2016)
▪ Corporate Intl Magazine Global Award – RPBA Tax Law Firm of the Year – Portugal (2018 / 2017 / 2016 / 2014)
▪ Corporate Intl Magazine Legal Award – RPBA Boutique Tax Law Firm of the Year – Portugal (2015)
▪ Acquisition International Tax Award – RPBA Tax Law Boutique Firm of the Year – Portugal (2015)
▪ Acquisition International Legal Award – RPBA Boutique Law Firm of the Year – Portugal (2014)
▪ Tax Directors Handbook – Ricardo mentioned / RPBA Tier 3 (2015) and Tier 4 (2014)
Recent Tax
Recognition
39

40. 40
▪ In the preparation of this presentation, every effort has been made to offer current, correct and clearly expressed information. However, the said
information is intended to afford general guidelines only. This presentation reflects information current at March 25, 2022.
▪ This presentation is distributed with the understanding that RICARDO da PALMA BORGES & ASSOCIADOS, SOCIEDADE DE ADVOGADOS, S.P., R.L.
is not responsible for the result of any actions taken on the basis of information herein included, nor for any errors or omissions contained
herein.
▪ RICARDO da PALMA BORGES & ASSOCIADOS, SOCIEDADE DE ADVOGADOS, S.P., R.L. is not attempting through this work to render legal or tax
advice and the information in this presentation should be used as a research tool only, and not in lieu of individual professional study with
respect to client legal matters.
▪ Portuguese domestic legislation, foreign legislation, EU Directives and tax treaties have anti-abuse provisions, and each actual client structure
should be analysed taking those into account.
▪ RICARDO da PALMA BORGES & ASSOCIADOS, SOCIEDADE DE ADVOGADOS, S.P., R.L. is the copyright owner of this presentation and hereby grants
you a non-exclusive, non-transferable license to use this presentation solely for your internal business, provided that you do not modify its
content in any way and that you do not retain any copyright or other proprietary notices displayed on such content. You may not otherwise
reproduce, modify, distribute, transmit, post or disclose the content on this presentation without RICARDO da PALMA BORGES & ASSOCIADOS,
SOCIEDADE DE ADVOGADOS, S.P., R.L.’s prior written consent.
General warning, disclaimer, copyright and authorised use

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