Residency & Tax Regimes
Golden Visa Residence Permit Portugal
Who may apply?
Citizens involved in an investment activity, individually or through a company, conducting one of the following in Portuguese national territory for a minimum period of five years
I) Capital transfer with a value equal to or above 1 million Euros
II) Creation of, at least, 30 job positions
III) Acquisition of real estate with a value equal to or above €500,000
IV) Acquisition of real estate with a value equal to or above €400,000 in designated areas
It covers shareholders of companies already set up in Portugal, or in another EU State with a stable presence in Portugal and with tax obligations fulfilled
Passport or another valid travelling document
Proof of legal entry and permanence in national territory
Proof of health insurance
Signed application enabling consultation of the Portuguese Criminal Records by SEF
Criminal Record Certificate from the relevant authority of the applicant’s home country
Or from any other country where he / she resided for over a year
Requirements on Investment
Performing an investment activity for five years attested by a bona fide declaration signed by the applicant
Provide evidence of having the ownership of real estate free from any liabilities
An up-to-date certificate issued by the Real Estate Registry
As means of evidence of compliance with tax obligations, the applicant shall deliver a declaration
Proving the absence of debts issued by the Inland Revenue and Customs Authority and by the Social Security
Requirements under General Law
Applicants must not have been convicted of a crime punishable with deprivation of liberty exceeding one year
Applicants must not be subject of an entry ban in national territory following a removal order from the country
Applicants must not be subject of alerts in the Schengen Information System
Applicants must not be subject of alerts in SEF’s Information Integrated System issued for purposes of non-admission
The holders of a Golden Residence Permit for Investment Activity may apply for family reunification under the provisions of the General Law at the Portuguese diplomatic or consular posts or at the Regional Directorate and Regional Delegation of the Immigration and Borders Service [SEF] in Portugal
Where do I apply?
Online at: • sef.pt
Provided all legal requirements are fulfilled, SEF will notify the applicant to grant a Golden Residence Permit
Provide evidence of having invested the minimum amount required
With the exception of investments in companies not listed in the Portuguese Stock Exchange
A statement issued by a financial institution accredited in Portugal certifying that the applicant is the sole or first holder of capital
An up-to-date certificate issued by the Commercial Register, certifying that the applicant holds a share in the capital of a company
Provide evidence of having created 30 job positions and registered the employees in the Social Security
An up-to-date certificate issued by the Social Security
Non-Habitual Resident Tax Regime
Benefits for a period of 10 years
Taxation on personal labour income (IRS) in Portugal is set at a fixed rate of 20%
No double taxation on pensions, employment or self-employment income obtained abroad
Acquire Non-Habitual Resident Status?
1. Non resident in Portugal for the last 5 years
2. Register as a tax resident in Portugal
A. You have stayed in Portugal for more than 183 consecutive or non-consecutive days
B. Remained for less time but have on 31st December, a home in Portugal that is intended to, or occupied as your habitual residence
3. Request the status of Non-Habitual Resident
A. Attributed at the time of registering as a tax resident in Portugal
B. By the 31st March of the following year that you become a resident in Portugal
Non-Habitual Resident Status
What is the taxation rate and criteria for domestic sourced income?
Employment or self-employment
The Taxation Rate is 20% plus a 3.5% surcharge in 2015
Tax on income derived from high added value activities of a scientific, artistic or technical nature
Architects, engineers and similar
Fine artists, actors and musicians
Doctors and dentists, teachers and psychologists
Liberal professions, technicians and similar
Investors, directors and managers (when companies are covered by the contractual regime of the Investment Tax Code)
Non-Habitual Resident taxed
For 10 years from the year of registering as a tax resident in Portuguese territory
Non-Habitual Resident Status
Foreign sourced income of Non Habitual Residents in Portugal are exempt from taxation when:
Pensioners / Retired People when
1· Income is taxed in the source State (Subject to the Convention to Eliminate Double Taxation signed by Portugal and that State)
2· Income is not considered to have been obtained through a Portuguese source (Subject to the criteria provided for in the IRS / Personal Income Tax Code)
Income from employment, when
1· Income is taxed in the State of origin (Subject to the Convention to Eliminate Double Taxation, signed by Portugal and that State)
2· Income is taxed in another State with which Portugal has not signed any Convention to Eliminate Double Taxation(When income has not been obtained on Portuguese territory as in article 18 of the IRS / Personal Income Tax Code)
Income from self-employment:
1. Through services of a high added value, of a scientific, artistic or technical nature
2. Through intellectual or industrial property investment, rental, capital gains income or increased equity when;
A· The income may be taxed in the source country, territory or region (Subject to the Convention to Eliminate Double Taxation#)
B· When no convention to eliminate double taxation has been signed the OECD model convention may be applied (Subject to any observations and reservations made by Portugal) (And the source country, territory or region does not have a privileged tax regime) (And income is not obtained in Portuguese territory as per article 18 of the IRS / Personal Income Tax Code
Tax Exemptions for Retired Residents
Retired persons who establish their permanent residence in Portugal
1. Retired persons who have not had residence in Portugal over the last five years may enjoy a total tax exemption on their pension income for a period of ten years, which in some cases may be extended for further periods.
2. Those who have earned and receive their pension in a country which has a double taxation agreement with Portugal may receive their pension tax free if they establish their permanent residence in Portugal under the legal tax exemptions now being offered.
Retired persons considered resident in Portugal for tax purposes if;
1. They stay in the country for more than 183 days
2. Have stayed for less than 183 days but have at their disposal a homestead with such conditions that it is their intention to occupy this property and maintain it as an habitual abode.
3. Be an immediate family member of someone who is considered to be resident for tax purposes as of December 31st of that year that income is received.
Note; Take into consideration that if one is resident for tax purposes then there is no Gift or Inheritance Tax between parents, children and grandchildren or husband and wife.
It is recommended that you hire the services of a licensed property lawyer when transacting on property in Portugal.
General rules / buying procedure
Once you have identified the property that you wish to purchase you can make your offer, once this has been accepted you will be expected to formalise this agreement by signing a Promissory Contract to sell and buy with the current owner.
The Promissory Contract
(Contrato de Promessa de Compra e Venda)
Both the Buyer and Seller of the property will enter into a Promissory Contract which will outline the terms and conditions of the purchase. This contract will then be registered at the Notary Office.
This is a legally binding Contract which shall afford the following protection
If the Seller withdraws from the Contract they are required to return twice the deposit. If the Buyer withdraws from the Contract they shall forfeit the deposit. Your lawyer will detail the laws and procedures in relation to producing and signing this Contract.
Along with the signing of this Promissory Contract you will be expected to make a down payment (Deposit), which is usually 10% to 20%.
Power of Attorney (Procuraçâo)
Due to a number of reasons it may be necessary to hire a third person such as a lawyer to legally represent you when you sell or buy property in Portugal. This document once prepared is registered at the Notary Office which then entitles your representative to legally act on your behalf in accordance with said Power of Attorney. This document can be prepared outside of Portugal but will need to be officially translated into Portuguese before the document becomes valid in Portugal.
You may at any time instruct a Third Person to act as your Legal Representative by producing and signing a Procuraçâo. This will indicate what type of authority your representative has and for what type of transactions they are able to perform on your behalf.
Fiscal Number (Numero Fiscal)
Each Buyer is obligated to obtain a Fiscal Number from the local Finanças -Tax Office.
When you buy property in Portugal you are obliged to register at the local Finanças where upon successful registration you will be given your own Fiscal Card and Tax Number. This document along with your Identity Card, Passport will be required when you complete your property purchase.
Imposto Municipal sobre Transmissões (IMT) Municipal Tax on Transactions
Prior to the actual purchase of the property, the Buyer will be required to pay a tax levied on the purchase of property in Portugal. This tax is paid at the local Tax Office (Finanças) and is calculated on the following basis: (In some instances the buyer may be exempt from these taxes). Property taxes will vary between 0% and 1.2% depending up on your individual circumstances and the type and value of the property that you are purchasing. Offshore companies are charged at a different rate. (Taxes for a Primary Residence may be charged at different rate).
Closing the Contract
Escritura de Compra e Venda – Once the correct documentation is in hand and all of the necessary taxes have been paid and in accordance with the Contrato de Promessa de Compra e Venda the Seller and Buyer may proceed to the “Closing of the Contract.” This is concluded at the Notary Office selected beforehand. The Notary will confirm that the documentation is correct and will then proceed to finalise the purchase of your property in Portugal. The outstanding balance is then paid to the Seller in the form of a Guaranteed Bank Instrument. This Act will be recorded by the Notary with the Buyer receiving two Certified Copies of said document.
Land Registry Office
Conservatoria do Registo Predial – Upon completion of the transfer of ownership it is recommended that the property be registered in the name of the new Owner at the local Conservatoria do Registo Predial (Land Registry Office). This procedure is not obligatory however it is recommended. The registration can be done at any time after the closing of the purchase.
Additional documentation needed to conclude the purchase
Property Tax Document
Caderneta Predial – The current Owner of the property will have this document which was supplied to him by the local Finanças – Tax Office. A valid document will need to be obtained, which for tax purposes only confirms the description of the property, Fiscal Number, Owner and annual taxes payable on declared value.
Energy Certificate and C02
Certificaçâo Energética e Ar Interior – This document will be supplied by the Seller and must be delivered by them at closing. This document certifies the condition of the property in relation to its energy efficiency.
Property Registration Certificate
Certidão de Teor – The local Conservatória do Registo Predial (Land Registry Office) will provide you with this document which will confirm that the Seller is the Legal Owner of the property. This document will also confirm whether there are any outstanding Charges or Liens secured on the property. This document confirms the Legal History of said property and is only valid for a short period of time.
License to Utilise
Licença de Utilização (Residential, Commercial, Agricultural, etc) – The current Owner of the property will have to provide this document which may be obtained from the Câmara Municipal, local Town Hall. This document confirms the legal usage for said property.
Imposta Municipal de Imóveis (IMI) – Properties in Portugal are subject to an Annual Tax (IMI). The IMI rates are calculated on a similar basis as the following:
Rural Properties: 0.8%
Urban Properties between: 0.4% to 0.8% (Rate varies from Council to Council)
Certain amounts can be paid in two or three installments.
The first is payable prior to the end of April with the remainder payable prior to the end of September. In some cases the taxes can be paid in three instalments. If this tax is not paid the State has the right to auction your property to the highest bidder to recover their losses.
Utility fees and charges: Water, Sewage, Waste Collection, Electricity, Gas, Telephone, Cable, Condominium fees (Where Applicable)
The information provided above is for guideline purposes only and does not constitute any legally binding information or agreement. It is recommended when buying or selling property in Portugal that you seek the advice of a legal representative, tax advisor and licensed real estate agent.
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