PORTUGAL LAW AND PRACTICE Contributed by: João Gonçalo Galvão, Carolina Cardoso Alves and Miguel Paquete, CS’Associados
claimed by the contractor, therefore avoiding the property being retained. Other encumbrances over the property to the benefit of entities involved in the construction are not typical, without prejudice to potential charges as a consequence of enforcement pro - ceedings whose purpose is to obtain full pay - Until recently, a project could only be used or inhabited provided that its suitability for the intended purpose was evidenced by a use per - mit. Pursuant to the recently enacted Decree-Law 10/2024 of 8 January, which seeks to stream - line licensing procedures, after completion of the works it is necessary to submit to the municipal - ity certain documents to conclude the control procedure (the documents vary according to the specifics thereof). However, it is no longer necessary to wait for a decision or confirmation from the municipality to use a property, since the delivery of the required documents and the pay - ment of applicable fees constitute, for all legal purposes, the title that enables its use for the intended purpose. ment of amounts owed by the owner. 7.7 Requirements Before Use or Inhabitation
ble for accounting for the VAT under the reverse charge mechanism. While VAT is generally exempt on property transactions, the option to waive this exemp - tion allows for VAT recovery on associated costs, which can be beneficial depending on the spe - cific circumstances of the transaction. 8.2 Mitigation of Tax Liability Share deals, acquisitions of companies hold - ing real estate through SPVs and mergers, and corporate restructuring are very common ways of optimising the exposure to RETT, stamp duty and CIT. More recently, an increase in activity by real estate investment funds/companies and SIGIs has been observed, these being particularly suit - able for large portfolio transactions. 8.3 Municipal Taxes Municipal taxes are levied on the occupation of business premises. The main municipal tax related to business premises is the Municipal Property Tax (IMI), an annual tax levied on the taxable value of real estate. Rates vary between 0.3% and 0.45% for urban properties, depend - ing 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 rehabilitation projects may also benefit from IMI exemptions for a period (eg, three to five years). Properties used for non-profit activi - ties or considered of public interest may likewise be exempt. Additional Municipal Property Tax (AIMI) is appli - cable to owners that hold properties with a com - bined tax value exceeding EUR600,000 (married
8. Tax 8.1 VAT and Sales Tax
The sale and purchase of corporate real estate are generally VAT exempt. However, the seller may opt to waive this exemption under specific conditions, such as when both parties are VAT- registered and the property is used for taxable activities. In such cases, VAT is applied at the standard rate of 23% and the buyer is responsi -
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