Buying Property to Immigrate to Portugal to understand the Portuguese Taxation system: Living in modern society, especially in a European country like Portugal with a well-established rule of law, its tax system is relatively comprehensive and diverse. In daily life, we almost interact with taxes every day, such as the 23% value-added tax charged on every purchase, the personal income tax that must be paid annually, and various other forms of taxes.
Another question that has garnered interest recently is whether Portugal imposes an inheritance tax. If you ask this question, almost all legal practitioners will tell you: Portugal does have provisions for inheritance tax, but the law provides exemptions for specific individuals.
In Portugal, inheritance tax is actually a form of stamp duty, which, as the name suggests, is a tax levied on someone inheriting property left by another person upon their death, with a tax rate of 10% on the property value. Isn't this a bit unfair to the deceased's family? Already suffering the pain of losing a loved one, dealing with the aftermath can be costly, and now they have to pay inheritance tax to the government; is the government profiting from the deceased's estate?
Actually, it is not. The law explicitly states that the deceased's surviving partner, children, grandchildren, parents, and grandparents are exempt from inheritance tax, and this exemption also applies to partners in a de facto marriage. Other individuals, including the deceased's siblings, must pay a 10% inheritance tax if they are the heirs (unless the property itself is exempt from taxation).
Since 2004, the inheritance tax rate has been 10%. For example, if the inherited real estate is valued at two hundred thousand euros, the heir would need to pay twenty thousand euros (two hundred thousand euros × 10%) in inheritance tax. However, not all items are subject to inheritance tax; personal belongings (such as clothing, shoes, watches, etc.), household items (such as appliances, furniture, etc.), education funds, retirement savings, pensions, social security benefits, and life insurance are not subject to inheritance tax by the Portuguese government.
The administrator of the estate (i.e., the person managing the estate before it is distributed) must declare the assets included in the estate, including houses and land, cars, boats, motorcycles, and other movable property that requires registration. Any property not mentioned above is exempt from inheritance tax. Although the deceased's partner, elders, and descendants are exempt from inheritance tax (including bank deposits), they must still declare to the tax authorities.
The estate administrator must notify the tax office of the deceased's death, the date and place of death, the heirs, their blood relations, and a list of assets (including the assets and their values) within three months of the deceased's passing. In special circumstances, the notification period may be extended by up to sixty days.
Birth is a significant event in life, and so is death. However, it is not the case that after death, everything returns to dust. The deceased's family, aside from handling the funeral, has many tedious matters required by the government to address. Only after all these matters are resolved can the deceased's estate be officially inherited by the heirs.
Although it seems that the procedures are very numerous and complex, involving quite a few details, if needed, one can inquire with the relevant government departments about the matters. Moreover, since inheritance involves many issues (including the deceased's assets and debts), a better option is, of course, to find a trustworthy lawyer to assist in handling related matters.
