Portugal Capital Gains Tax

Capital gains tax (Imposto sobre Mais-Valias) applies when selling any Portuguese property bought after 1988. To calculate the taxable gain, you take the selling price, minus the acquisition costs, any costs incurred during the transfer of ownership, and also any property improvement costs that have incurred within twelve years of the sale.

For residents of Portugal, the gains are added to your other annual income and taxed at the standard IRS tax rates between 14.5% and 48%, but only 50% of the gain is taxable and you receive inflation relief after two years of ownership.

However, CGT does not apply if a resident of Portugal is selling a primary residence and using the proceeds to buy another residence within Portugal or in another EU or EEA member state. If you are either retired or aged over 65, you can also receive an exemption if you reinvest gains in an eligible insurance contract or pension fund within six months of the sale.

If the vendor is a non-resident in, then 28% (25% for companies) is payable on all capital gains. If you are an EU citizen, you can opt to be taxed as a Portuguese resident instead, but must declare your worldwide income to calculate the applicable tax rate.

The standard Portuguese VAT rate is currently 23%. As member state of the EU, Portugal is obliged to implement the VAT Directives, which provide guidance on VAT. Where there is a conflict, the European Directive takes precedence.