PORTUGAL Law and Practice Contributed by: João Gonçalo Galvão, Carolina Cardoso Alves, Miguel Paquete and Mafalda Oliveira Cordeiro, CS’Associados
8.5 Tax Benefits There are special RETT, IMI and stamp duty rates and exemptions on the acquisition for housing purposes, resale/rehabilitation and properties classified as his - torical or cultural. Special corporate structures are exempt from CIT on certain categories of income. Foreign investors benefit from a lower withholding tax of 10%. Depreciation is deductible for properties used for business activities. Costs of maintenance and repair, condominium fees, insurance costs and others may be deducted. There are special tax reductions for individuals renting properties. Gains earned from the sale of the primary residence may be exempt if reinvested in another home within the EU/EEA or life insurance/retirement plans. Capital gains tax is only levied on 50% of the gain.
erties, depending on the municipality. The tax is owed by the property owner. Small businesses with low taxable income may qualify for temporary IMI exemptions. Certain urban rehabili - tation projects may also benefit from IMI exemptions for a period (eg, three to five years). Properties used for non-profit activities or considered of public interest may likewise be exempt. Additional Municipal Property Tax (AIMI) is applica - ble to owners that hold properties with a combined tax value exceeding EUR600,000 (married couples or civil partners who opt for joint taxation benefit from a higher exemption threshold of EUR1.2 million). A 0.7% rate is applicable on the taxable value above EUR600,000 (or EUR1.2 million if jointly taxed), a 1% rate is applicable on the portion exceeding EUR1 mil - lion (or EUR2 million if jointly taxed), and a 1.5% rate is applicable on the portion exceeding EUR2 million (or EUR4 million if jointly taxed). Companies are subject to a single 0.4% rate on all applicable properties (unless used for business, in which case AIMI does not apply). Offshore entities are subject to a 7.5% rate on all real estate owned in Portugal. 8.4 Income Tax Withholding for Foreign Investors Non-resident individuals and entities earning income from Portuguese sources are generally subject to withholding tax. The rates can be reduced or elimi - nated under applicable double taxation agreements between Portugal and the investor’s country of resi - dence. Foreign investors in real estate investment funds/com - panies and SIGIs are subject to a 10% withholding tax on income, paid by these entities.
506 CHAMBERS.COM
Powered by FlippingBook