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BUYING PROCESS

GUIDE TO THE BUYING PROCESS & TAXATION

GUIDE TO THE BUYING PROCESS & TAXATION

Fiscal Number

Before purchasing a property in Portugal (or opening a bank account), you will need a fiscal(tax) number (Numero Fiscal de Contribuinte). This can be applied for and immediately received at your local Tax Office (Repartição de Finanças). You need to provide your residency/identity card or passport and an address in Portugal to which the Tax Office can send your fiscal card (Cartão de Contribuinte). If you do not have a Portuguese address you will normally be able to use that of a solicitor, estate agent or friend.

Please only work together with government licensed estate agents. You can identify them by their AMI Nr. and lawyers or solicitors who are fully qualified. They charge from 1 to 1,5% of the value of the transaction for their services. We are happy to provide recommendations of local English speaking lawyers if requested.

PRIVAT OWNERSHIP

Promissory contract

(Contrato promessa compra e venda ). Once you find a property and have your offer accepted, the next stage is usual for both parties to sign a promissory contract. In this document you promise to buy the property and the owner promises to sell it to you at an agreed price and within an agreed timescale. At this point you will pay a deposit of usually 10% of the purchase price and agree on a date to where the purchase is to be completed. The contract refers to the legal documents explained below, the terms in which the transaction will be completed and other conditions of the sale.

Portuguese law protects both parties. If the buyer does not proceed with the purchase he loses his deposit. If the seller changes his mind, he has to return double of the deposit to the buyer or can be forced to complete.

Completion of Sale

(Escritura Publica de Compra e Venda). The final deeds is the transfer of ownership and will be signed at a notary office, either by the buyer’s/vendor’s or their representatives who have owner of attorney. Now the balance of the purchase price has to be paid. The property is now yours and the notary will proceed with the registration of the property in your name.

 

CORPORATE OWNERSHIP

In this case the property is owned by a corporate structure. The buyer purchases the company share. Your lawyer will carry out a due diligence of the company, to clarify if there are any obligations and all further regulations made by the shareholder(s).

The companies are usual registered in white-listed jurisdictions as Delaware or Malta.

A Share Purchase Agreement will then be prepared upon signature by both parties and the agreed purchase price will be transferred in exchange with company share`s.

 

NECESSARY DOCUMENTS FOR A PROPERTY SALE

Property Tax document (Caderneta Predial )

At the local Tax Office (Repartição de Finanças) you can obtain the official Property Tax document which certifies the inscription of the property for fiscal tax purposes. It details the owner and their fiscal number, a description of the property (areas, number of rooms, area and type of plot, history etc.), it also identifies the property with a unique reference number and states how much the owner will pay in local yearly taxes (IMI). This document is necessary for the transaction of the property. If the property is new a temporary form will be used which will be replaced by the the official document when it is issued.

Property Registration Certificate. (Certidão de Teor)

At the local Land Registry Office (Conservatória do Registo Pedrial) will be proved if the seller has ownership of the property and no one else has further rights, also if it’s free of charges and mortgages. A Registration Certificate should be issued, it describes the property’s legal history and it’s necessary for the deed.

Habitation License ( Licença de Utilização )

A copy of the uage license from the local Town Hall (Câmara). This document is the prove of the original building permission. For a residential property it is necessary to have a habitation license, for non-residential properties a commercial or industrial license is required. This document also must be available for the deeds.

Ficha Tecnica

For all properties completed after March 2004. This document explains the construction of the property and the materials used.

Energy Certificate

Legal requirement as from January 2009 for all properties which are sold or rented.

Confirmation from the tax department (Finanças) confirming that all IMI (annual council tax) has been paid.

Proof of payment of IMT

The property transfer tax has to be paid before the sale can be completed. IMT for land (prédio rustico) is 5%. Is a property sold, which serves no residential purposes, eg an office building its a fixed rate of 6.5%. IMT on other properties is based on a sliding scale depending on the value of the property.

ID’s and tax numbers of the owners and buyers.

Certidão Comercial, issued by the Conservatória do Registo Comercial if a company is involved.

Property transfer tax – IMT (Imposto Municipal sobre Transmissoes)

Permanent Occupation

Rate

Deduction

up to € 92.407

0

0

€ <92.407 - €126.403

2%

€ 1.848,14

€ <126.403 - € 172.348

5%

€ 5.640,23

€ <172.348 - € 287.213

7%

€ 9.087,19

€ <287.213 - € 574.323

8%

€ 11.959,32

> <€ 574.323

6%

0

 

Non Permanent Occupation

Rate

Deduction

up to € 92.407

1%

0

€ 92.407 - € 126.403

2%

€ 924,07

€ <126.403 - € 172.348

5%

€ 4.716,16

€ <172.348 - € 287.213

7%

€ 8.163,12

€ <287.213 - € 550.863

8%

€ 11.035,25

> € 550.836

6%

0

Other

Rustic and agricultural plots – 5%

Other property and urban plots – 6,5%

Stamp duty (Imposto de Selo)

Is calculated in relation to the sales price and paid before completion, when the IMT (transfer tax) is due. The rates are,

Property: single rate of 0,8% on the declared value.

Mortgage: Single rate of 0,6% on the value of the mortgage.

Fees and registration costs

You have to calculate legal and registration fees for the deed and bank charges for the mortgage.The Notary and deed registration fee will be max. 1,000€.

Portuguese bank account

It’s beneficial to open a Portuguese bank account to pay for the purchase of property, taxes, solicitors, utility bills etc. that you will need to pay when owning a property abroad.

Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, this information does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.