Capital Gains Tax

Understand the system for capital gains, inheritance and gift taxation in Portugal...

Capital gains derived from the transfer of real estate or shares, or other investments, are also considered as income and, as such, they are also taxed by the Personal Income Tax. However, capital gains arising from transfer of real estate or shares from a Private Limited Company (LDA) are exempt from taxation if the assets were acquired before 1989.

Residents

In case of residents in Portugal, the capital gains derived from the transfer of property are only taxed on half of their value and the applicable tax rate depends upon the resident's aggregate income.

If a person sells their permanent residence and reinvests the capital gain obtained in the acquisition of another permanent residence in Portugal, the capital gain is not taxed. For this exemption to apply, there are some requirements that must be fulfilled.

Capital gains derived from the transfer of shares are subject to a tax rate of ten percent. Instead of applying this tax rate, the tax payer may choose to aggregate this with their income.

The capital gains derived from the transfer of shares are not subject to taxation if those shares are from a Public Limited Company (SA), if they are delayed for more than one year, and as long as no more than half of the asset is not in real estate.

Non-residents

In the case of non-residents, capital gains derived from the transfer of real estate are taxed in total and they are subject to a tax rate of 25 percent. Capital gains derived from the transfer of shares are subject to a tax rate of ten percent of the total income.

Other Taxes

There is currently no wealth tax in Portugal.

The transfer of assets located in Portugal during the donor's life (gifts) or after the donor's death (inheritances) is taxed by the same tax – stamp duty.

Gifts and inheritances are subject to a tax rate of 10 percent (if real estate is transmitted as a gift, there is also a tax of 0.8 percent). However, if the transfer of the property is made during the donor's life the spouse, ascendants and descendants are exempt from stamp duty and only have to pay 0.8 percent of the real estate value.

Related Information

Disclaimer: Tax law is complex and every effort has been made to offer information that is current, correct and clearly expressed. The information in this summary is intended to be no more than a general overview of the position and certain details have been deliberately omitted. The contents of this page should not be taken as an authoritative statement of Portuguese tax law and practice. Neither the author nor the publisher is responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. This text is not intended to render legal, accounting or tax advice. Readers are encouraged to seek professional advice concerning specific matters before making any decision.

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