Inheritance Advice for Portuguese Property

Portuguese Inheritance Law states that when you die your properties will be shared among your heirs according to the law of your country of residence. It is a common misconception that as a foreigner you have to leave your assets in accordance with Portuguese law, which imposes certain “forced heirs”.

A “foreigner” can make a Portuguese Will leaving their own property to the person of their choice even if they are resident, providing they make a Will saying so. This Will must contain a declaration that their personal law is governed by the principle of free disposition of property by testament.

This is then acceptable to the Central Wills Registry in Portugal. Generally speaking a valid Portuguese will is sufficient to dispose of the estate as you wish.

Inheritance tax on Portuguese property

Inheritance tax on property or assets in Portugal has to be paid in Portugal. The property or assets also have to be declared back in the UK although due to Double Taxation Laws you can offset the tax paid in Portugal against the tax payable in the UK

The rate of tax (Imposto do Selo) paid on an inheritance payable in Portugal will depend on:

  1. The relationship between the person who died and the beneficiaries (some categories are exempt).
  2. The rate is always 10% of the total value of the inheritance.
  3. The type of goods, some are exempt of tax (stock dividends, personal goods, retirement saving funds and education funds, savings in stock, pensions or investment real estate, credits from life insurance, pension and social security allowances).

Inheritance tax in the strictest sense was abolished from the Portuguese legislation in 2004 and it was substituted by the “Imposto do Selo”, which covers several transactions in Portugal, including inheritance. There is therefore no specific Inheritance Tax although there is a tax on the transfer of inheritance assets.

Inheritance tax exemption for Portuguese property

The closest relatives have a tax exemption:

  • Husband / Wife
  • Children
  • Grandchildren
  • Grandparents

The rest of the relatives or people who are not so directly related to the deceased do not have a tax exemption, they pay tax on the full amount of 10%.

Need help with inherited property in Portugal?

Our UK-based team of property lawyers are highly experienced in helping clients who have inherited property in Portugal, including where you wish to keep the property or plan to sell the property you have inherited.

If you own property in Portugal, we can also help you with making a Portuguese Will.

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 inherited property in Portugal.

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