1. Value Added Tax
The Value Added Tax (VAT) was introduced in Portugal after it joined the European Community in 1986. All transactions of goods and services conducted within Portugal, as well as goods imported from outside the European Union, are subject to VAT. Portugal has three VAT rates: the standard rate is 23%, the reduced rate is 12%, and the super-reduced rate is 6%.
2. Municipal Property Transfer Tax (IMT)
All properties and real estate transactions in Portugal are subject to the Municipal Property Transfer Tax, which is the tax payable by the buyer on the purchased property. The tax base is determined by the higher of the property transaction price or the registered value of the property. For rural properties, the transaction tax is 5% of the transaction price. For urban properties, the tax rate varies based on the transaction price: transactions below 92,407 euros are exempt from the Municipal Property Transfer Tax; transactions between 92,407 and 574,323 euros apply a sliding scale tax rate of 2% to 8%; transactions exceeding 574,323 euros have a fixed tax rate of 6%. The Municipal Property Transfer Tax is paid by the property buyer, typically at the time of payment for the property or on the first working day after payment. For property transactions conducted abroad, the tax must be paid within the following month after the transaction.
3. Municipal Property Tax (IMI)
Property owners are required to pay Municipal Property Tax annually, which falls under local taxes. The tax rate for rural properties is 0.8%, while urban properties have a tax rate ranging from 0.2% to 0.5%. The tax base is calculated based on the registered value of the property and is periodically reviewed by local authorities. The taxable base is usually 80-90% of the market price of the property.
4. Stamp Duty (IS)
Stamp Duty is levied on various contracts, property transfer documents, business books, and other economic activities. Portugal collects Stamp Duty in two ways: one is a fixed rate for items such as checks, commercial books, wills, and property registrations, with fees ranging from 5 cents to 25 euros; the other is a percentage of the total contract amount, with rates ranging from 0.04% to 25%, applicable to contracts including property sales, donations, guarantees, mortgages, and insurance policies.
