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Capital Gains Tax Portugal

Capital Gains Tax Portugal

Portugal is the ideal country to buy a property or invest in the real estate market, with attractive returns on investments and many desirable locations to choose from.


Many investors have opted to buy property in Portugal, given that it is affordable compared with neighboring countries


When it comes to taxation in Portugal, it can initially seem a little complicated, particularly with capital gains tax.


If you live in Portugal and own Portuguese property or other assets, you may face capital gains tax in Portugal, depending on your Portugal residency status.


However, taxation in Portugal, unlike in other countries, the capital gains tax in Portugal only applies to gains made on real estate and investments. Therefore, personal items are not subject to tax, and inheritances are only subject to a limited form of stamp duty.


This article focuses on the capital gains tax, which is important to know when buying and selling property in Portugal. 


Exposure to capital gains tax will depend on your Portugal tax residency status, how you own the assets, and, if it applies to owning property, whether it is your primary residence.

Foreigners will also be able to have significant tax advantages in Portugal under the Non-habitual residence(NHR) scheme. You can learn more about Portugal’s Non-Habitual Residence here.

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What is Capital Gains tax?

Capital gains are the profit you generate when selling a property. The owner of the property will need to disclose the tax return for the year in which the house was purchased and the respective that was paid when acquiring the property.


If works or maintenance were carried out on the property, these should be declared – for example, installing a new heating system.


You will need to show the invoices and the amounts that were paid. These will be carried out in the capital gains assessment.


If you are looking to reinvest your total selling price into a new property, then the potential capital gain may not be subject to tax.


This is only applicable if the house you sell is your permanent address and corresponds with your tax address.


An important consideration is the time period. You must purchase a new house and reinvest the total selling price 24 months before such a sale or 36 months after the sale.



If this is the case, you need to inform the Portuguese Tax Authorities you want to reinvest in the Portuguese property market.

Capital gains tax for non-Portuguese residents

If you are a non-Portuguese resident, the full capital gain from selling a property is taxable at a flat rate of 28%.


If you are an EU resident, you can choose to be taxed as a Portuguese resident instead of at the sale income tax rates. Nonetheless, you will need to declare your worldwide income to calculate the correct and relevant tax rate on the gain.

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