PORTUGAL LAW AND PRACTICE Contributed by: João Gonçalo Galvão, Carolina Cardoso Alves and Miguel Paquete, 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 historical 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 resi - dence may be exempt if reinvested in another home within the EU/EEA or life insurance/retire - ment plans. Capital gains tax is only levied on 50% of the gain.
couples or civil partners who opt for joint taxa - tion 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 million (or EUR2 million if jointly taxed), and a 1.5% rate is appli - cable 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 busi - ness, in which case AIMI does not apply). Off - shore 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 eliminated under applicable double taxation agreements between Portugal and the investor’s country of residence. Foreign investors in real estate investment funds/ companies and SIGIs are subject to a 10% with - holding tax on income, paid by these entities.
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