I am interested in obtaining permanent residency of Portugal through its golden visa program. I understand that with an investment in the real estate market, I might be subject to property-related taxes. If I participate in this program by making a capital investment into a Portuguese fund, what tax liabilities do I have to fulfill?
To participate in the Portuguese Golden Visa program, regarding the tax liabilities that you have to fulfill, upon the initial application you must prove that your tax status is regularized upon presentation of negative statement of debt, issued by the Portuguese tax authority and social security, no later than 45 days in advance of the initial request. If this is not possible you must provide a declaration of non-existence of registration in those exact entities.
The purchase of a property for a Golden Visa application is not relevant in terms of tax treatment, and the fact of applying for a Golden Visa does not reduce any liabilities for the owner of the property. What is relevant, however, is if the person who purchases a property in Portugal is a tax resident in Portugal or not. The tax treatment is different for people who purchase a property in Portugal and are not tax residents in Portugal. First of all, when a non-tax resident purchases a property the following taxes must be paid: property transfer tax, a municipal tax levied on the transfer for consideration of real estate located in the Portuguese territory. The rates can vary between 5% to 10%. Some properties, however, can be exempted of this tax if, for example, it has touristic utility or if the property is destined to rehabilitation works. Other taxes are stamp duty (0.8%) and property tax. The latter is due by the owner of the property every year. The rates vary between 0.3% to 7.5%. Some property, however, can be exempted of this tax if, for exemple, it has touristic utility. Please note: If the owner has in his property a building or buildings, whose t ax registration value is more than 600,000, he must pay an additional tax. The taxable basis corresponds to the sum of the tax registration value (TRV) of all the urban properties held by each taxpayer, reported on January 1 of each year. Deductions/exemptions: This is in case of individuals and undivided inheritances a deduction of 00,000 to the taxable basis is foreseen. Married or living in non-marital partnership taxpayers, who opt to submit a joint tax return, have the right to deduct 1,200,000 to the sum of the TRV of all the urban properties. The rates vary between 0.7% to 7.5%. There is also PIT, which is levied on income obtained by individuals. This means if the property owner receives an income for the property and, let’s say, he rents the property, this rent is taxed as income and withheld. The rate is 25%. If the property owner decides to sell the property, the gains are taxed at a rate of 28% and withheld. Please note that the rates referred above are specific for non-tax residents in Portugal. The tax residents in Portugal are taxed for the global income they obtain and the taxes rates vary between 10.15% and 38.4%. If the person who decides to purchase a property in Portugal lives outside of the EU territory and EEA, he needs to have a tax representative in Portugal who will represent him before the tax authorities and will receive all communications from them. Finally, there’s another regime, with more attractive taxes for some incomes obtained in Portugal (this does not apply to rental income), for non-habitual residents, this is, people who live in Portugal but don’t stay for more than 183 continuous days. This regime allows the application of taxes at a rate of 20% to some activities. They are liable for PIT on the net employment and self-employment income from high value-added activities at a flat rate of 20%. Foreign-source income may be exempt, under certain conditions.
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