Buying & Selling
Please find below some important information about the Buying and Selling process in Portugal.
1. The Starting Point
Once you have found a property that you want to buy, it is common practice to make the seller an offer through your estate agent. Once a price is agreed between the parties, you should appoint a lawyer to guide you through the buying process and sign a Promissory Contract as soon as possible. The whole purchasing process can take between a week or some months, depending on how quickly you and the seller wish to proceed and whether all the necessary paperwork is in order.
2. The Promissory Contract (Contrato Promessa de Compra e Venda)
The Promissory Contract is a legally binding contract signed between seller and buyer and includes the following information:
• Identification of the parties;
• Identification of the property;
• Stage payments;
• The standard penalty clause;
• What is included in the purchase, e.g. furniture, golf membership, etc, in the form of an attached inventory list;
• Completion date.
On the day the Promissory Contract is signed, the buyer (either directly or through their appointed lawyer) pays the seller the agreed deposit (normally between 10% and 20% of the purchase price).
The Promissory Contract protects the buyer and the seller, in that if the seller withdraws from the contract they are required to return the deposit in double to the buyer, whilst if the buyer withdraws from the contract, the seller is entitled to keep the deposit.
3. The Portuguese Fiscal Number (Número de Contribuinte or Número de Identificação Fiscal)
Before you are able to purchase a property and open a bank account in Portugal, you need to obtain a Fiscal Number from the local tax office (Autoridade Tributária e Aduaneira). To obtain this number, you will need a valid passport and a document which proves your residence (driving license, German Identity Card, etc.).
4. The Deed of Purchase and Sale (Escritura de Compra e Venda)
The Escritura is the offical Deed of Purchase and Sale and can either be signed straight away, without a Promissory Contract being signed before or after the latter was signed. There is usually a period of time between these contracts, which depends on the terms agreed between the parties, although it is normally not more than 90 days.
After the Deed has been signed in front of a Portuguese Notary, your lawyer will register the property in your name at the Land Registry (Conservatória do Registo Predial) and change all utility contracts from the previous owner(s) into your name. The registration at the Tax Office (Autoridade Tributária e Aduaneira) is nowadays automatically done by the notary.
5. Your lawyer's duties
In Portuguese law, an attorney-at-law is known as advogado. His or her job equals that of both solicitors and barristers.
It is normally the buyer's lawyer who prepares the Promissory Contract after carrying out all the necessary legal searches on the property and after making sure that the property has no debts, i.e. that there are no outstanding charges against the property, such as utility bills, taxes, mortgages, condominum fees, amongst others. Your lawyer will also help you obtaining a Portuguese fiscal number.
As long as you give your lawyer Power of Attorney (Procuração), he/she can represent you and sign the Promissory Contract and the Deed on your behalf, as well as any other documents directly or indicrectly related with the purchase of the property.
After the Deed has been signed, your lawyer will register the property in your name at the Land Registry (Conservatória do Registo Predial) and change all utility contracts from the previous owner(s) into your name.
6. Legal expenses
Some lawyers charge a fixed rate for their work (minimum 800€ + VAT), whilst others charge a percentage of the purchase price, which can go up to 1.5%.
7. Real Estate Transfer Tax - IMT (Imposto Muncipal sobre Transmissões Onerosas de Imóveis)
This tax must be paid by the buyer prior to completion, i.e. prior to the signature of the Deed. The amount payable varies according to the purchase price. Up to a purchase price of 550,836.00€ the percentage is varaiable on a sliding scale up (from 1% to 8%). If the purchase price is higher than 550,836.00, there is a fixed percentage of 6%. The applicabe IMT tax for plots or properties within a touristic complex is always 6,5%. The IMT tax is slightly higher for second homes than for permanent homes. Your estate agent and your lawyer will be able to provide you with an exact simulation.
8. Stamp Duty, Notary and registration fees
These need to paid by the buyer as well. The Stamp Duty is currently 0.8% of the purchase price and can either be paid together with the IMT tax or at the notary where the Deed is signed. Notary fees vary according to the purchase price. Regsitration fees apply when the new owner(s) are registered at the Land Registry and are currently 225€ (online) or 250€ (Land Registry).
9. Estate Agent's fees
In Portugal, these are generally paid by the seller.
10. Corporate ownership
Some properties are owned by companies which offers you the possibility of buying the company instead of the property. Most of these companies have their domicile in Delaware, U.S.A., although some properties may also be owned by Portuguese companies, but this is rather seldom.
The purchase of a company located in a juridiction with a more favourable tax regime, such as Delaware or Malta, usually involves the purchase of the seller's 'beneficial interest' in the shares of the company, rather than the actual shares themselves.
Most of the companies are set up using nominee shareholders, who are the registered owners. They in turn hold the shares or share capital, in trust for the true owner. The company administrators will also provide directors and other company officers and take care of all the legal requirements of filing returns and preparing accounts, which may be necessary in certain jurisdictions.
The Tax Regime for Non-Regular Residents, created on the 23rd of September by Decree-Law no. 249/2009 changed the articles 16, 22, 72 and 81 of the Portuguese Personal Income Tax Code (CIRS). The Ordinance no. 12/2010 of January 7th, complements the application of that regime and Law no. 20/2012 of May14th updated its wording. This regime applies to tax payers of Personal Income Tax (IRS) who had not resided in Portugal for tax purposes in the last five years, and transfer to the Portuguese territory its tax residence from 2009 onwards. It is basically an introduction of specific taxation rules for Personal Income Tax (IRS).
Based on a favourable Personal Income Tax regime, the aim is to attract to Portugal non-resident citizens, qualified professionals, as well as individuals with a superior wealth level or purchasing power. This attraction is based on the application of the exemption method as the preferred method of elimination of international juridical double taxation of foreign source and application of a special rate of 20% (mitigated and proportional taxation) to certain forms of income.
In order to qualify as a non-regular resident, it is necessary:
a) To be a tax resident in Portugal: A tax resident in Portugal is someone who remains in Portugal, in a given year, for more than 183 days (consecutively or not) or who, having remained less time, on the 31st of December of that year owns a property and is able to demonstrate that he/she intends to maintain and occupy it as a residence.
b) Not to have been deemed tax resident in Portugal in the last 5 years prior to the application of the regime. The person simply has do demonstrate that he/she was unable to fulfill the requirements of becoming a tax resident during the last 5 years.
This regime also applies to emigrants who want to return to Portugal.
The taxable person deemed non-regular resident acquires the right to be taxed as such during a period of 10 consecutive years, from the year of registration, as a resident in Portuguese territory, having to comply with the requirements of residence every year.
The applicant must request the inclusion of his/her name at the Cadastre of Tax Payers when applying for the Portuguse residence permit or until the 31st of March of the year after he became resident in Portugal.
3. Who may apply?
Non-residents who are willing to establish permanent residence in Portugal or who wish to return after a minimum absence of 5 years (e.g. independent professionals, pensionists, dependent workers). Or even non-residents wishing to establish themselves as temporary residents as a result of secondment relations (e.g. independent professionals, salaried workers, members of statutory bodies).
4. Income Tax Regime
4.1. Income from Portuguese sources:
By choice, income from categories A and B may not be included, as long as these were generated by activities with high added value, such as architects and engineers, artists, actors and musicians, auditors and tax consultants, doctors and dentists, professors, investors, administrators and managers, senior executives, as specified in Ordinance 12/2010, of January 7th.
4.2. Income from foreign sources:
The income from foreign sources - dependent work - are exempt from taxation in Portugal, since they are actually taxed in the source state and provided they were not obtained in Portuguese territory. The income from foreign sources – pensions – are exempt from taxation in Portugal, since they are actually taxed in the source state or they are not obtained in Portuguese territory.
5. Other Requirements
• Obtain the Portuguese Tax Identification Number from the Tax Office;
• Open a bank account in Portugal;
• With regard to mandatory enrollment in Social Security, it should be noted that this is only required if the non-regular resident’s income is from category A or B in Portugal. In this sense, if they are not covered by Social Security, the non-regular residents should carry a valid health insurance, to ensure health and accident protection, or alternatively, have the European health card (in case of European citizens) in order to be adequately protected in case of illness or accident in Portugal.
1. Golden Residence for investment activity
New legal provisions provide the possibility for those who pursue investment activities in Portugal to apply for a Residence Permit, for example, those who transfer capital, create jobs or acquire Real Estate.
The holders of a Golden Residence Permit for the purposes of investment activity have the right to family regrouping, and may gain access to a permanent residence permit, as well as to Portuguese citizenship in accordance with the current legal provisions.
2. Who may apply?
Citizens involved in an investment activity, either individually or through a company conducting, at least, one of the following operations in the Portuguese territory, for a minimum period of 5 (five) years:
- Acquisition of a property with a value equal to or above 500 thousand euros;
- Capital transfer with a value equal to or above 1 million euros;
- Creation of, at least, 10 jobs.
It covers shareholders of companies already set up in Portugal, or in another EU State, with residence in Portugal and fulfilled tax obligations.
3. Investment requirements
Performing an investment activity for a minimum period of 5 (five) years, attested by a bona fide declaration signed by the applicant.
3.1. Acquisition of Real Estate with a value equal or above 500,000€
- Provide evidence of giving the ownership of Real Estate Property.
- Public deed or promissory contract of the property, with a declaration of an authorised financial institution to exercise its activity in Portugal stating the effective transfer of capital to stating the effective transfer of capital to its acquisition or to execute as a down payment of the promise to purchase in equal or superior value of 500,000€ and;
- An up-to-date certificate issued by the Real Estate Registry, which must always be, in the case of contract-promise and where legally feasible, the respective register.
3.2. Capital transfer with a value equal to or above € 1 million
- Provide evidence of having invested the minimum amount required, including stocks or shares of companies;
- Declaration of a financial institution authorized to exercise its activity in Portugal certifying: the effective transfer of capital in amount of not less than €1 million, to an account demonstrating the investor is the sole or first holder of capital; or de acquisition of stocks or shares of companies, and;
- An up-to-date certificate issued by the Commercial Register, certifying that the applicant holds a share in the capital of a company.
3.3. Creation of, at least, 10 Jobs
- Provide evidence of having created 10 jobs and registered the employers in the Social Security;
- An up-to-date certificate issued by the Social Security.
4. Minimum permanent residence periods
For the purposes of renewing a residency permit, you may have to show that you have resided in Portuguese territory for a minimum period of 7 days, either consecutively or non-consecutively, during the first year, and 14 days in the subsequent two year periods.
5. Family reunification
The holders of Golden Residence Permits for Investment have the right to family regrouping, and may gain access to a permanent residence permit, as well as to Portuguese citizenship in accordance to the current legal provisions
6. Required documentation
- Passport or another valid travelling document;
- Proof of legal entry and permanence in national territory;
- Proof of health insurance;
- Signed application enabling consultation of the Portuguese Criminal Record by SEF;
- Criminal Record Certificate from the relevant authority of the applicant’s home country or from any other country where he/she resided for over a year;
- As means of evidence of compliance with tax obligations, the applicant shall deliver a declaration proving the absence of debts issued by the Inland Revenue and Customs Authority and by the Social Security
7. Other requirements under General Law
- Applicants must not have been convicted of a crime punishable with deprivation of liberty exceeding one year;
- Applicants must not be subject of an entry ban in national territory following a removal order from the country;
- Applicants must not be subject of alerts in the Schengen Information System;
- Applicants must not be subject of alerts in SEF Information Integrated System issued for purposes of non-admission.
1. The first step
If you would like to sell your property, we highly recommend to contract the services of a licensed estate agent like Kaiser Properties. Agency fee are usually 5% + VAT.
2. Agency fees
In Portugal, these are generally paid by the seller. The standard commission is 5% + VAT of the sales price.
3. Why choose us?
- Motivated, experienced, knowledgeable and multi-lingual staff;
- Vast and efficent network of partnerships in different Europen countries;
- Strong marketing, including online and print media advertising;
- Modern and bright office in privileged location;
- Optimised website.
4. Required documents
All Government Licensed Estate Agents are required to obtain the documents listed below from the seller, this enabling them to establish that the property has full legal status. No Agent can officially list a property without receiving the necessary documents. As all Licensed Estate Agents are liable to periodic inspection by their governing body IMPIC, they must ensure copies of these documents are in place.
The required documents are as follows:
4.1. Deeds (Escritura Notarial de Compra e Venda)
This document indicates the title of acquisition of a property. The originals are held by the Notary Office where they were signed.
4.2. Tax Office Registration (Caderneta Predial)
This document shows the description of the property at the Tax Office and its fiscal value on which rates are charged.
4.3. Registration Certificate (Certidão de Registo Predial)
This document confirms as to whom the property is registered to and also gives a description of the property with the size of the land and the house and will show any existing charges on the property. The description on this certificate must match the description on the Caderneta Predial, failing which one of the two is not correct and should be rectified.
4.4. Habitation License (Alvará de Licença de Utilização)
This document confirms that the property was built according to the Câmara (Local Council) plans and specifications and that the property has been inspected for habitation upon completion.
4.5. Plans (Projectos de Arquitectura)
It is worthwhile obtaining a set of approved plans from the Câmara to check that what has been built is in accordance with the originally approved plans.
4.6. Borehole License (Registo de Captação de Água – Furos Aquíferos) - if applicable
This document confirms the borehole is registered with the relevant authority.
4.7. Septic Tank Registration (Registo de Descargas de Águas – Fossas Sépticas) - if applicable
This document confirms the septic tank is registered with the relevant authority.
4.8. Personal papers
We will require copies of the Portuguese Fiscal Card and Passport / Cartão de Residência.
4.9. Ficha Técnica da Habitação
This document provides global information about the property, including materials which were used, names and contacts of suppliers, builder, etc.
This document is NOT required for:
a) Properties built before the 7th of August 1951;
b) Properties for which the Habitation License (Licença de Utilização) was applied or issued until the 31st of March 2004.
4.10. Energy Performance Certificate
Obligatory since the 1st of December 2013 for all properties which are up for sale.
If you do not live in the property all year round, it is advisable to provide us with a key so we can easily show your property to prospective buyers. Some sellers decide to handover the key to a third party (sometimes the maid or gardener) but this is not an ideal solution as we will have to liaise with the key holder whenever we want to show the property and this may cause delays or even make it impossible to show the property to some clients.
5.2. Preparation of the property
If you live in the property, it is advisable to tidy everything up before we take photos or show the property to prospective buyers. Since the olfaction plays an important role when it comes to choose a property (very often unconsciously), we recommend to air the property prior to visits and to avoid the use of air-fresheners or cleaning products with a strong perfume or odour.