If you buy or inherit a property in Portugal, there are ongoing obligations that you need to meet to ensure that you continue to comply with Portuguese law.
Insurance
It makes sense to insure your property and its content.
Council Tax (Imposto Municipal sobre Imóveis—IMI)
This is normally paid annually in one, two or three lumps, depending on the value of the tax sum, between April and November. The amount will depend on the location, value, size and age of the property.
Non payment of IMI can lead to legal proceedings being taken against you by the tax authorities and an embargo being placed on the property.
Utilities
You will be responsible for the utility charges – electricity, gas, water sewerage, rubbish collection etc. from the time that you own the property.
Community Charges (Quota de Condomínio)
You should pay these otherwise the property can be confiscated and auctioned in order to settle the debt.
Income Tax
If you are non-resident you must declare any income you have earned in Portugal. This applies even if you receive this income by renting out to people from your home country and the money never touches Portugal.
Even if you do not receive any rent from the property it is assumed that you have received some sort of benefit and you are taxed on this.
You will also normally have to declare this income in the country where you are tax resident but can normally offset the tax paid in Portugal through Double Taxation Agreements.
Tax residence
The ongoing taxes that you pay when you buy a property in Portugal will normally depend on whether you are tax resident there or not.
If you leave the country for more than six months, you should appoint a representative residing in Portuguese territory for tax purposes. However, if you are leaving for a member state of the European Union or the European Economic Area, the designation of this representative is merely optional.
Tax residence is a determined by a number of factors:
- How long will you spend time in that country? Is it 183 days or more a year (not necessarily continuously). If so you are likely to be tax resident there.
- Is your main home there? If it is then you are likely to be tax resident there
- Is your immediate family (spouse and dependent children) based there? If so you are likely to be tax resident there
- Is your main economic interest there? If so are you likely to be tax resident there.
- If you do become tax resident in a country then you will normally stop paying taxes in your home country and start to pay taxes in the new country.
- Do not be tempted to have selective amnesia when it comes to declaring taxes. The authorities in both Portugal and the UK are clamping down on people who do not do things properly.
Sometimes you should declare something for tax purposes in one country and also in another. Portugal and the UK have a Double Taxation Agreement which means that you do not normally pay tax twice and can offset the tax paid in the other country against the tax that you would otherwise pay in your home country.
Need help with owning property in Portugal?
Our UK-based team of property lawyers are highly experienced in helping clients who have bought or inherited property in Portugal, including dealing with ongoing costs and legal issues involved in Portuguese property ownership.
With a thorough understanding of both UK and Portuguese law, we can provide clear, reliable legal guidance in plain English, giving you the confidence to deal effectively with any property you own in Portugal.
Call: 01438 840 258 Email: admin@judicaregroup.com