THE BUYING PROCESS
The Letter of Intent and Appointing a Local Lawyer
Once you have found the property you would like to buy and your agent has successfully negotiated a deal on your behalf, a professional agent will prepare a 'letter of intent'. This document clearly states the agreed price, exchange and completion dates, and what is to be included.
At the same time, we recommend that you instruct a local lawyer to represent you in the purchase. Your signed letter of intent will be sent to your legal representative as a reference to the agreed terms.
Private Ownership
Exchange of contract
Now that your lawyer has been instructed, they will begin all the necessary legal searches on the property. These include ensuring the seller has clear title to sell and that there are no outstanding charges on the property. Your lawyer will then prepare the Promissory Contract (Contrato Promessa de Compra e Venda) which is a legally binding contract between buyers and vendors and is normally signed by both parties in the presence of a notary/lawyer. The Promissory Contract will confirm who the buyers and vendors are, details of the property, schedule of payments, completion date and any special terms agreed by both parties. Upon signature, it is normal procedure for the buyer to pay the vendor a 10% deposit, usually via the lawyers’ clients’ accounts. Under Portuguese law, if the vendor does not fulfil his contractual obligations, they are liable to pay back the deposit in double to the purchaser. If the purchaser is in breach of contract, the deposit is non refundable.
Completion
The Final Deed (Escritura) is the official deed of transfer of ownership from the vendor to you. It will be signed on the agreed date at the notary’s office, either by you or by your lawyer if you have opted to give them power of attorney. At this time, the balance of the purchase price is paid and the notary subsequently records the transaction in the official record. Once the deed and all other associated transactions are completed, your lawyer will register you as the new owner in the Land Registry (Registo Predial). Buyers should request a copy of this registration for their files.
Fiscal number
To purchase a property in Portugal you will require a Portuguese fiscal number. This fiscal number will be for you as a non-resident and therefore has no tax implications in Portugal. Your lawyer will normally advise and help to obtain one.
Corporate Ownership
Exchange of contract
Many high-end properties are owned by a corporate structure. The property itself is an asset of the company and buyers purchase the company’s shares. These structures are usually domiciled in Malta or Delaware;
however, there are several other white-listed jurisdictions around the world. If the property you choose is in one of these structures, your local lawyer will carry out the legal searches on the property as normal. In addition to that, they will carry out the due diligence on the corporate structure through a request to the management company that binds them in accordance to their regulations. These searches will clarify the fees, warranties, representations and legal procedures of the company. A Share Purchase Agreement will then be prepared and, upon signature by both parties, all the conditions of the transaction are secured and a usual
10% deposit will be paid to the vendor, via the lawyers’ clients’ accounts. This transaction takes place under the jurisdiction of the company’s domicile.
Did you know ?
The buying process is usually
completed within four to six
weeks but our fastest sale
completed in three days!
Completion
The process is simply completed by both parties fulfilling the terms described in the Share Purchase Agreement and the buyers transferring the balance of the purchase price to the vendors, again usually via the lawyers. Afterwards, the respective management company will transfer the share ownership from vendor to purchaser. This process is quick, simple and in English.
The Buying Costs
Legal expenses
Lawyers’ fees normally vary from 1% to 2% of the purchase price.
Private Ownership
IMT – Property Purchase Tax
This is the Portuguese Property Transfer Tax which is payable by the purchaser prior to completion. The rate is variable and is based on a sliding scale according to the price of the property, up to 6%. Your lawyer will always advise you of these costs at an early stage.
Stamp duty, notary and registration fees
These are payable by the purchaser upon signature of the deeds at the public notary and at the Land Registry when the transfer of property ownership is registered. The stamp duty is a flat rate of 0.8% of the property price.
Corporate Ownership
In the case of a share transfer process, the IMT, notary, stamp duty and registration fees are mitigated.
PROPERTY TAX ISSUES
Property tax laws in Portugal have gone through several significant changes during recent years. The rateable value of properties (VPT) being the value attributed by the tax authorities to properties for tax purposes and is the base used to calculate property taxes or in certain cases determine the minimum taxes applicable to
property transactions. Previously the VPT was very low and in general a huge discrepancy existed between the rateable and market values. To rectify this situation and increase tax revenues, the Portuguese tax authorities implemented in 2003 a deep reform to property tax laws which has resulted in the gradual increase in the rateable value of all properties, bringing them more in line with actual market values and consequently increasing taxes payable whilst reducing and controlling tax evasion.
To update the VPT the legislator created a formula in which the new VPT is more objectively calculated and achieved:
VPT = VC x A x Ca x CI x Cq x CV, where:
VPT = Rateable value attributed by tax authorities to the property
VC = Base value of properties built (value of construction per m2 fixed annually by tax authorities plus value of m2 of implantation ground 25% of such value) – presently EUR 603
A = Gross area of construction – sum of the total area of construction including terraces, garage,
parking places and storages
Ca = Purpose of the property i.e. commerce, services, residential
CI = Location – coefficient fixed every three years by the municipality and can vary between
0,4 and 3,5
Cq = Quality and comfort – factors that can increase or decrease the value like existence of swimming pool or non-existence of lift in a building with more than three floors
CV = (Vetustez) Age criteria applicable in accordance with age of the property.
Older properties lower coefficient.
All properties sold since 2003 have been revalued in accordance with this new formula. All other properties were subject to a process of general revaluation which ended in 2013. In the vast majority of the situations the increase of the rateable value of the properties, led to an increase in the IMI payable. Upon receipt of the
tax authority’s notification with the new rateable value, areas and coefficients applicable should have been checked as mistakes did happen. Although the time limit given by the tax authorities to submit a claim is 30 days from receipt of the notification, the tax authorities accept they will make amendments in cases where there is a clear mistake in the elements used to make the valuation.
Properties for habitation and plots of land for construction are updated every three years based on factors corresponding to 75% of the currency devaluation coefficients fixed annually by the government; for income tax purposes this can also be revalued at the request of the owner within three years from the last revaluation. This is an opportunity to rectify any mistakes found.
Properties for habitation and plots of land for construction are updated every three years based on factors corresponding to 75% of the currency devaluation coefficients fixed annually by the government; for income tax purposes this can also be revalued at the request of the owner within three years from the last revaluation. This is an opportunity to rectify any mistakes found.
Here is a summary of the taxes applicable to buying, owning, selling or inheriting properties in Portugal:
IMT – Paid on the acquisition of a property. This tax is payable by the purchaser prior to completion of
the transaction. On properties for habitation the rate varies according to the purchase price of the property and can go up to 6%. On rustic land the rate applicable is 5%, on plots of land or other type of properties the applicable rate is always 6.5%*. The minimum amount on which the IMT can be paid is the VPT even if the sales price is lower.
Notary, stamp duty and registration fees – these have to be paid by the purchaser prior to signing the notarial deed and the registration of the property into the buyer’s name. The stamp duty on the purchase is 0.8% of the sales price. The minimum amount on which the stamp duty can be paid is the VPT even if the sales price is lower. Notary and registration fees and expenses will not exceed EUR 1,000.
IMI – Annual Property Taxes – Payable yearly in arrears usually in two installments although as from 2012 (rates paid in 2013) it can be paid in three instalments (April, July and November), for annual IMI invoices above EUR 500. This tax is based on the VPT and can vary between 0.3% and 0.5%. Within this limit the rate is fixed annually by the council of the area where the property is located. In the Council of Loulé the rate applicable for 2015 is 0.39%. The IMI for rustic properties remains at 0.8%*.
Stamp Tax – (IS) – To increase tax revenue and meet the impositions of international entities controlling Portugal’s economic restructuring in 2012, the Portuguese government introduced a new annual tax on Portuguese properties with residential purposes (including plots of land for housing) with a VPT of over EUR 1m. The new tax increases the total annual property tax payable to a maximum of 1.5% of its rateable value, which though high, is still substantially lower than other European countries like Spain, Greece and France,
where annual property taxes can go up to 3.6%, 2.1% and 2.2% respectively**. This tax has been applicable since 2013, relating to 2012 at the rate of 1% of the VPT*. The payments of this tax are to be
made within the same time limits of the payment of the IMI and based on the same VPT used to calculate the IMI.
Capital Gains Tax – On a sale of a property there is currently a capital gains tax to pay at a rate of 28% for non-resident individuals and 25% for companies (non-residents). This tax is calculated on the difference between the sales price and either the purchase or construction price of the property (if applicable) index linked or its first rateable value index linked whichever is the highest. It is important when building a property
to make sure that you receive proper invoices from the builders of the amounts paid so that you have the possibility to offset these costs against capital gains tax payable when the property is sold.
There are other costs that you can use to offset against this tax such as invoices of certain refurbishments made to the property in the past twelve years, taxes, notary and registration fees paid at the time of acquisition of the property, and the real estate agent fee.
Did you know ?
Invoices you use to offset against
your CGT no longer expire after
three years, you can use them for
up to 12 years.
If the property you are selling is your main residence and if you reinvest the proceeds of the sale within 36 months in the acquisition, construction or refurbishment of another property designated as your main residence, within the EU territory or in a territory belonging to the European economic area with whom Portugal has agreements for the exchange of information in tax matters. You can avoid the payment of this capital gains tax totally or partially depending on the value you reinvest.
Did you know ?
Inheritance Tax – This tax is not
presently applicable in Portugal
to inheritance or gifts occurring
between close relatives.
i.e. parents/children and spouses although on gifts you have to calculate a 0.8% stamp duty based on the VPT. Any other situations of inheritance or gift will be subject to stamp duty at a rate of 10% of the VPT.
Tax Department Lottery – In 2014 the government introduced a tax department lottery (e-fatura) whereby the individual taxpayers who request a proper invoice detailing their fiscal number when acquiring any assets and/or services will be included in a draw and may win prizes (presently cars). With this measure the government is aiming to fight fiscal evasion. More information on this can be obtained at www.portaldasfinancas.gov.pt
* Please note the values mentioned above for IMT, IMI and IS will increase significantly and not benefit from limitation of tax payable for two years if the Company owning the property is domiciled in a 'blacklisted jurisdiction'.
** In Expresso – economy supplement 02/02/2013. Please note this is general information and for specific
advice you should contact a lawyer or tax advisor.
PROPERTY TAXATION
Privately Owned
Property
|
White-listed Corporate Ownership
of Property
|
|
Property Purchase
Tax (IMT)
|
Properties for habitation up to 6%
Rustic land 5%
Plots of land for construction &
others 6.5%
|
No IMT
|
Other Purchase
Costs
|
0.8% stamp duty
+/- EUR 750 notary and registration
costs
Legal fees 1% to 2%
|
No stamp duty or registration fees
Legal fees 1% to 2%
|
Captial Gains Tax
(CGT)
|
28% on the profit
(in Portugal for non-resident)
|
Please seek professional guidance
|
Annual Running Costs
of Company
|
None
|
Between EUR 1.5k and EUR 3.5k
|
Annual Property Tax (IMI)
This calculation is based on the
property rateable
value
|
0,3% to 0,5%
0.8% rustic land
|
0.3% to 0.5%
0.8% rustic land
|
Properties with a Rateable
Value of over EUR 1m (IS Tax)
in addition to the IMI
|
1% of rateable
value
|
1% of rateable value
|
Annual Fiscal
Representation
|
+/- EUR 250.00
|
+/- EUR 510.50
|
NON-HABITUAL RESIDENTS REGIME
Europe’s Best Kept Secret
Portugal may not be the first country that comes to mind when talking about favourable tax regimes but in fact, Portugal offers a very attractive tax regime for resident individuals, referred to as Non-Habitual Residents (NHRs). This regime provides for a flat income tax rate of 20% for qualifying employment and selfemployment income and a tax exemption for almost all foreign source income.
Portugal Ranked 36 out of 144
2014-2015 World Economic Forums’ Global Competitiveness Report
Portugal Ranked 25 out of 189
2015 World Bank Doing Business Report
The Portuguese economy has become increasingly diversified and service-based since the country joined the European Union (EU) in 1986. In competitiveness, Portugal ranks 36 out of 144 countries in the 2014-2015 World Economic Forums’ Global Competitiveness Report and Portugal ranked 25 out of 189 countries in the 2015 World Bank Doing Business Report. Add free remittance of funds, a friendly residence permit regime allowing for free movement within the Schengen area and the possibility to apply for Portuguese nationality and consequently an EU passport, the absence of wealth tax and a beneficial treatment of gifts and inheritances, and it is clear why Portugal is a very attractive location. The country is investing to become a premium tourism and real estate tourism location, as well as a leading EU country in R&D and information
technology. The government has launched an economic strategy focused on boosting exports and foreign direct investment. The launch of the ‘Living in Portugal’ site (www.livinginportugal.com/pt/), the Golden Visa programme and the 2014 Corporate Income Tax Reform and the 2015 Personal Income Tax Reform are examples of the government’s commitment to attract foreign investment to Portugal.
Portuguese Tax Regime for Non-Habitual Residents
The NHR regime, which is a beneficial Personal Income Tax (PIT) regime, is available to individuals becoming tax resident in Portugal, provided they were not Portuguese tax resident in any of the previous five years. The status is granted for a period of 10 years. The Portuguese tax authorities have simplified the procedures for registration under the NHR regime, which is also an evidence of Portugal’s commitment to attract foreign talents, as well as high net worth individuals (HNWIs) and their families.
To be considered as a tax resident in Portugal, and in accordance with the rules in force as from 1 January 2015, one of the following conditions should be met:
• Spend more than 183 days, consecutive or not, in Portugal in any 12-month period starting or ending in the fiscal year concerned; or
• Regardless of spending less than 183 days in Portugal, maintain a residence suggesting being a habitual residence in Portugal during any day of the period referred above.
Under certain circumstances, split-year residence may be possible, i.e. taxpayers may be regarded as tax resident during only part of the tax year and as non-resident for the remaining part.
NHRs are subject to a reduced flat 20% personal income tax rate on salaries as well as on business and professional income of a Portuguese source arising from listed “high value-added activities of a scientific, artistic or technical nature”, as per a list published by the Portuguese tax authorities. A 3.5% surcharge is currently also applicable.
NHRs will be exempt from PIT on salaries of a non-Portuguese source, if such salaries were subject to tax in the country of source under an existing double tax treaty or, if no double tax treaty exists, provided that they were effectively taxed in such country.
As a result, multinational corporations will have a huge advantage in locating their centres of excellence (e.g. R&D centres) in Portugal and Portuguese companies will have a significant stimulus to attract the best foreign talents.
Business and professional income of a non-Portuguese source relating to “high value-added activities of a scientific, artistic or technical nature”, as well as from intellectual or industrial property or ‘know-how’, earned by NHRs abroad are exempt from PIT, provided such income could be taxed under an existing double tax treaty or could be taxed in another non-blacklisted jurisdiction in accordance with the provisions of the OECD Model Tax Treaty. It is not necessary that the income is actually taxed, but merely that the
Under certain circumstances, split-year residence may be possible, i.e. taxpayers may be regarded as tax resident during only part of the tax year and as non-resident for the remaining part.
NHRs are subject to a reduced flat 20% personal income tax rate on salaries as well as on business and professional income of a Portuguese source arising from listed “high value-added activities of a scientific, artistic or technical nature”, as per a list published by the Portuguese tax authorities. A 3.5% surcharge is currently also applicable.
NHRs will be exempt from PIT on salaries of a non-Portuguese source, if such salaries were subject to tax in the country of source under an existing double tax treaty or, if no double tax treaty exists, provided that they were effectively taxed in such country.
As a result, multinational corporations will have a huge advantage in locating their centres of excellence (e.g. R&D centres) in Portugal and Portuguese companies will have a significant stimulus to attract the best foreign talents.
Business and professional income of a non-Portuguese source relating to “high value-added activities of a scientific, artistic or technical nature”, as well as from intellectual or industrial property or ‘know-how’, earned by NHRs abroad are exempt from PIT, provided such income could be taxed under an existing double tax treaty or could be taxed in another non-blacklisted jurisdiction in accordance with the provisions of the OECD Model Tax Treaty. It is not necessary that the income is actually taxed, but merely that the
country of source has the right to tax it.
Rental income, capital gains on the sale of foreign real estate and investment income, such as dividends and interest, from a non-Portuguese source are also exempt from PIT, provided the conditions above are met.
Pensions paid abroad to NHRs are also exempt from PIT, if such pensions were subject to tax under an existing double tax treaty or if the pension is not considered as obtained in Portugal and the related contributions did not give rise to a PIT deduction in Portugal. Since most double tax treaties grant exclusive taxation rights to the country of residence (which would be Portugal), in practice this means that the pension income may end up not being taxed in Portugal or in the Portugal country of source.
Furthermore, by becoming Portuguese NHRs, HNWIs may be able to accrue their wealth in a friendly tax environment (other than a blacklisted tax haven), to dispose of their assets while benefiting from tax exemptions, to pass on their wealth or estate without inheritance or gift taxes to the next generation and/or to enjoy their retirement without tax leakage on their pensions.
Why live and invest in Portugal
• A 20% flat rate for Portuguese-employment income from qualifying activities and exemption for almost all foreign source income is available for NHRs;
• A tax exemption for gifts and inheritance tax to spouse, descendants or ascendants. Inheritances or gifts to other individuals will be either not taxable, due to generous territoriality rules, or subject to a flat 10% stamp tax rate;
• No wealth tax and free remittance of funds either to Portugal or abroad;
• Beneficial treatment for pensions and other life insurance products (including unit linked) may further significantly reduce the effective tax burden on capital invested;
• Companies licensed to operate in the Madeira International Business Center, including branches of non-resident entities, benefit from a 5% flat Corporate Income Tax (CIT) rate until 31 December 2020, applicable to income derived from transactions with non-residents (or with other MIBC entities), limited to thresholds of taxable income, and depending on the creation of jobs. Exemption from withholding tax applies on dividends, interest, royalties and services;
• Portuguese companies may take advantage of EU non-discrimination rules and EU directives on
mergers, dividends, interest and royalties, as well as Portuguese double tax treaties;
• Dividends and capital gains obtained by Portuguese companies can benefit from a participation exemption regime, which make Portugal interesting as a location for investments abroad, including investments in Brazil and the Portuguese speaking countries in Africa.
Portugal has signed 71 double tax treaties, 64 of which are in force, more than 50 investment protection agreements, 15 tax information exchange agreements, most of which are already in force (e.g. Bermuda, Cayman and Gibraltar) and several social security agreements.
Rental income, capital gains on the sale of foreign real estate and investment income, such as dividends and interest, from a non-Portuguese source are also exempt from PIT, provided the conditions above are met.
Pensions paid abroad to NHRs are also exempt from PIT, if such pensions were subject to tax under an existing double tax treaty or if the pension is not considered as obtained in Portugal and the related contributions did not give rise to a PIT deduction in Portugal. Since most double tax treaties grant exclusive taxation rights to the country of residence (which would be Portugal), in practice this means that the pension income may end up not being taxed in Portugal or in the Portugal country of source.
Furthermore, by becoming Portuguese NHRs, HNWIs may be able to accrue their wealth in a friendly tax environment (other than a blacklisted tax haven), to dispose of their assets while benefiting from tax exemptions, to pass on their wealth or estate without inheritance or gift taxes to the next generation and/or to enjoy their retirement without tax leakage on their pensions.
Why live and invest in Portugal
• A 20% flat rate for Portuguese-employment income from qualifying activities and exemption for almost all foreign source income is available for NHRs;
• A tax exemption for gifts and inheritance tax to spouse, descendants or ascendants. Inheritances or gifts to other individuals will be either not taxable, due to generous territoriality rules, or subject to a flat 10% stamp tax rate;
• No wealth tax and free remittance of funds either to Portugal or abroad;
• Beneficial treatment for pensions and other life insurance products (including unit linked) may further significantly reduce the effective tax burden on capital invested;
• Companies licensed to operate in the Madeira International Business Center, including branches of non-resident entities, benefit from a 5% flat Corporate Income Tax (CIT) rate until 31 December 2020, applicable to income derived from transactions with non-residents (or with other MIBC entities), limited to thresholds of taxable income, and depending on the creation of jobs. Exemption from withholding tax applies on dividends, interest, royalties and services;
• Portuguese companies may take advantage of EU non-discrimination rules and EU directives on
mergers, dividends, interest and royalties, as well as Portuguese double tax treaties;
• Dividends and capital gains obtained by Portuguese companies can benefit from a participation exemption regime, which make Portugal interesting as a location for investments abroad, including investments in Brazil and the Portuguese speaking countries in Africa.
Portugal has signed 71 double tax treaties, 64 of which are in force, more than 50 investment protection agreements, 15 tax information exchange agreements, most of which are already in force (e.g. Bermuda, Cayman and Gibraltar) and several social security agreements.
GOLDEN VISA
Portugal, an Attractive Country for Non-European Union Nationals
With the aim of attracting foreign investors to live and invest in Portugal, the Portuguese government has created a special residence card for investors (Golden Visa) for non-EU nationals.
For the purposes of obtaining the Golden Visa, the applicant should meet at least one of the following conditions:
i) A transfer of capital to Portugal of at least EUR 1m
ii) Creation of at least 10 new jobs in Portugal
iii) Acquisition of real estate in Portugal with a value of, at least, EUR 500k
iv) Invest at least EUR 350k in a scientific project
v) Invest or support an artistic project of a minimum of EUR 350k
vi) Rehabilitate and maintain a heritage site or building – minimum EUR 350k
vii) Purchase a property to realise works of urban rehabilitation – minimum EUR 500k
viii) The regime will be open to investors at 20% less in terms of expenses if they are prepared to develop projects in areas of extremely low population density.
The individual may invest directly or through a company with its registered head office in Portugal, provided that it meets one of the above requirements. However, when the investment is made through a company, the investment amount considered for the purposes of granting a Golden Visa will be proportional to the share capital held by the applicant.
The individual may invest directly or through a company with its registered head office in Portugal, provided that it meets one of the above requirements. However, when the investment is made through a company, the investment amount considered for the purposes of granting a Golden Visa will be proportional to the share capital held by the applicant.
For the purposes of meeting the criteria relating to the acquisition of real estate, the following situations are also admissible:
• Co-ownership of the real estate, with each co-owner making an investment of a minimum of EUR 500k
• Making only Promissory Contracts of purchase before the initial application for the Golden Visa,
provided that a deposit of a minimum of EUR 500k is made. However, at renewal stage (i.e. after one year), the purchase of the property must have been completed
• (Bank) financing of the acquisition of the property for the purchase price in excess of EUR 500k
• Rental or letting of the property for commercial, agricultural and tourism purposes.
The requirements should be met throughout a minimum period of five years, counting from the date the residence card is issued for the first time.
The first residence card (Golden Visa) is valid for one year and should be applied for with the Portuguese Foreign Services during the first 90 days of presence in Portugal. This residence card may then be renewed for successive periods of two years, provided that the conditions
The first residence card (Golden Visa) is valid for one year and should be applied for with the Portuguese Foreign Services during the first 90 days of presence in Portugal. This residence card may then be renewed for successive periods of two years, provided that the conditions
are maintained.
To be able to renew the Golden Visa, its holder should stay at least seven days in Portugal during the first year of validity and at least 14 days during each of the subsequent two-year renewal periods.
To be able to renew the Golden Visa, its holder should stay at least seven days in Portugal during the first year of validity and at least 14 days during each of the subsequent two-year renewal periods.
The investor’s family members are also allowed to enter and live in Portugal, based on the investor’s Golden Visa, through a family reunion application, which should be made from the moment the Golden Visa for the investor is approved.
Once in possession of the Golden Visa, investors are allowed to travel within the Schengen countries without the need to apply for a visa for each country to be visited. It is possible to stay in
Once in possession of the Golden Visa, investors are allowed to travel within the Schengen countries without the need to apply for a visa for each country to be visited. It is possible to stay in
the Schengen area for 90 days in each period of 180 days.
It is now more than two years since the Golden Visa programme was launched. According to recent information released, from October 2012 to 28 February 2015, there were issued 2,203 Golden Visas, most of which were granted in 2014 (1,526). The Golden Visas were granted to nationals from China (80% of the Golden Visas issued), Russia, Brazil, Lebanon and South Africa. The regime has already generated an investment in Portugal of more than EUR 1.3bn. There were also 3,316 residence permits issued to Golden Visa holders' family members.
From the alternative ways of investment chosen by investors to obtain the Golden Visa, the acquisition of real estate has been the preferred way and the most requested areas to invest are in Lisbon (e.g. Parque das Nações) and its neighbourhood areas of Estoril, Cascais and in the Algarve.
The investors who obtain the Golden Visa may also qualify as potential beneficiaries of the Non-Habitual Residents tax residence regime.
Through the beneficial tax regime for Non-Habitual Residents and the Golden Visa regime, Portugal is now a very attractive country to live and invest in, both for European and non-European nationals.
It is now more than two years since the Golden Visa programme was launched. According to recent information released, from October 2012 to 28 February 2015, there were issued 2,203 Golden Visas, most of which were granted in 2014 (1,526). The Golden Visas were granted to nationals from China (80% of the Golden Visas issued), Russia, Brazil, Lebanon and South Africa. The regime has already generated an investment in Portugal of more than EUR 1.3bn. There were also 3,316 residence permits issued to Golden Visa holders' family members.
From the alternative ways of investment chosen by investors to obtain the Golden Visa, the acquisition of real estate has been the preferred way and the most requested areas to invest are in Lisbon (e.g. Parque das Nações) and its neighbourhood areas of Estoril, Cascais and in the Algarve.
The investors who obtain the Golden Visa may also qualify as potential beneficiaries of the Non-Habitual Residents tax residence regime.
Through the beneficial tax regime for Non-Habitual Residents and the Golden Visa regime, Portugal is now a very attractive country to live and invest in, both for European and non-European nationals.
PRIVATE PROPERTY vs COMPANY OWNERSHIP
Buying and owning a property in ones own name or via a corporate entity is a question many are faced with when buying a property in our area. There are pros and cons for each which should be taken into consideration. The actual process of both is described in the Buying Process and you should take advice from your legal and tax professionals.
Private Ownership
What are the benefits?
The most important benefit is that the purchase is very straightforward in Portugal. We do still recommend you use a local lawyer who can ensure that the property and its paperwork are in order. After that, one does not have to maintain any corporate structure which vary from EUR 1.5k to EUR 4.5k annually and annual fiscal representation is marginally less expensive.
Company Owned Property
What are the benefits?
Confidentiality – Buyers and sellers benefit from a degree of anonymity.
Succession planning – Where beneficial owners are husband and wife the beneficial ownership of the shares can be held jointly with rights of survivorship so that if either of them should die the beneficial ownership automatically passes to the surviving spouse. Upon the death of the surviving spouse the transfer of ownership to your heirs is made easier as the legal title to the property remains the same, thus avoiding the necessity to obtain recognition of the validity of a non-Portuguese will in Portugal.
The costs involved – Possible mitigation of taxes when the property is sold via a sale of the shares in the company there are advantages for both the buyer and the seller in the mitigation of transfer tax, notary charges and Capital Gains Tax in Portugal. However, there are costs in running these companies and the value of the property needs to justify these costs and your lawyer will be able to advise you on this. If a property has a value of under EUR 500k this is perhaps not the best option.
Which Jurisdiction? – The two most widely used jurisdictions which have suitable holding company regimes for asset owning structures are USA (Delaware) and Malta, but there are various others too such as New Zealand and even the UK. None of these are considered fiscally privileged by the Portuguese government; they have flexible and well-established legal systems, uncomplicated corporate compliance requirements and have re-domiciliation legislation in place.
The USA has a sophisticated and flexible corporate legal regime and one state in particular, Delaware, is commonly used for property ownership. For clients looking for an EU jurisdiction Malta’s tax regime is suitable for basic property holding structures. Although generally a civil law jurisdiction, Malta’s company law is broadly very similar to the UK and other commonlaw jurisdictions. Both jurisdictions are relatively inexpensive but because the statutory compliance
The USA has a sophisticated and flexible corporate legal regime and one state in particular, Delaware, is commonly used for property ownership. For clients looking for an EU jurisdiction Malta’s tax regime is suitable for basic property holding structures. Although generally a civil law jurisdiction, Malta’s company law is broadly very similar to the UK and other commonlaw jurisdictions. Both jurisdictions are relatively inexpensive but because the statutory compliance
requirements are greater in Malta than Delaware, the administration of a Malta company is slightly more expensive than Delaware.