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There are other taxes, which have to be taken into account and these are,
Income tax
Where a property is rented out, rent is charged to income tax and on a sale 50% of chargeable capital gain is subject to Portuguese income tax.
Stamp duty
There is a stamp duty of 0.8% on transfer of real estate.
Donations tax
Gifts to a spouse, antecedent or descendant are tax- free but other donations attract a tax of 10%
A Solution
Fortunately there are territories, which are not on Portuguese black list and by purchasing a property in Portugal through a properly structured corporate vehicle incorporated in one of these locations, it is possible to avoid penalties on offshore companies. These arrangements may bring with them other benefits such as,
•The ability to sell property in future without buyer having to pay Real Estate Transfer tax, •Avoidance of Portuguese capital gains tax on re-sale, •Avoidance of donations tax or inheritance tax •Avoidance of deemed benefit provisions in U.K. law.
As taxes and manner in which they are applied change frequently specialist advice should always be taken before entering into any arrangements.
The Chesterfield Group provides a full range of trustee, and corporate advisory, formation and management services and invites enquiries. More particulars can be found on our web-site www.chesterfield-management.com