Buying a property in Portugal, as you may have already gathered from other pages on the site, incurs a number of taxes and charges.
Portuguese Tax Authorities, (Financas) require a Fiscal Representative to be used for meeting all tax obligations for Non-Residents with property or income in Portugal.
Any tax liability incurred in Portugal should serve as either a tax credit or deduction to any UK tax and as such result in a nil expense at the end of the day.
Tax requirements do not cease once you have purchased the property. As in the UK and other European countries a local ‘service’ tax is also applied. This varies slightly from local ‘conselho’ (council) but will normally be in the region of 0.8% of the property value.
The tax is collected annually in arrears in 2 stages – November and April. However depending on the value of the property and your ‘residence’ position this tax can be waived for a period of up to 6 years.
Property owners who are letting their properties also need to ensure which national or local obligations they may need to conform with. We can arrange for these requirements to be dealt with simply and efficiently, leaving you time to enjoy the more relaxing benefits that Portugal has to offer.
Selling a property holds further tax obligations. Portugal has a Capital Gains Tax (CGT) of 25%. There are very few allowances. This may change in 2008 with the proposed change to a flat rate of 18%. It is possible with correct planning to reduce future tax liability.