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 | | | | | This is the oldest form of taxation existing in Portugal, dating back to the XVII Century. This tax is levied on deeds and a wide range of economic activities.
Law 150/99 dated 11/09 approved the Stamp Duty Code, and has since been subject to many alterations.
Tax Characteristics
This tax is levied on a number of legal acts, as detailed in the Stamp Duty General Schedule (see attachments). Because of the diverse nature of acts subject to Stamp Duty, it is important to consult this table in order confirm its applicability. It may cover multiple situations, such as lease agreements, acts relating to inheritances and donations, checks, deposits, exploration of geological resources in state-owned land, betting, lending of credit, interest, cabotage contracts, and more.
Parties who have an economic interest in the act are responsible for the payment of Stamp Duty. If there is more than one interested party, the amount is distributed among each one. For some situations of doubt the law anticipates the objective presumption of who is the interested party.
All legal acts subject to Value Added Tax are not, simultaneously, subject to Stamp Duty.
Stamp Duty is levied on all acts taking place in National Territory. The provisions of the law also encompass:
- a) Acts or documents that even when subscribed outside of the national territory, are presented in Portugal to take effect here;
- b) Credit transactions undertaken and guarantees given, when one of the parties is a resident or considered as such;
- c) Interest and commissions collected by any entity with permanent residence in Portugal or considered to be a permanent resident;
- d) Insurance, when the risk covered, is within national territory.
As a rule, payment is due when the act, subject taxation, takes place. The settlement and payment of Stamp Duty should generally be made by the official entities or intervening officers in the act, such as notaries, or by the issuers of loans or insurance, in the case of loans or insurance. | | |  | |
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| | | | | Corporate Income Tax (IRC) |
The IRC is regulated by Decree-Law 442-B/88 dated 30/11, which entered into effect on 01/01/89. The Corporate Income Tax is levied on the following entities, per the table below:
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Corporate bodies headquartered or with effective management in Portuguese territory exercising commercial, industrial or agricultural (commercial or co-op) activities. |
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Total Income / Profit |
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Corporate bodies having their head-office or effective management in Portuguese territory, but who do not exercise activities of a commercial, industrial or agricultural nature (Associations, foundations unincorporated civil companies). |
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Total Income (sum of income from different categories according to the Personal Income tax - IRS). |
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Corporate bodies who are not resident entities in Portuguese territory who carry out their activities as a permanent establishment (branch). |
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Income attributable to the permanent establishment located in Portuguese Territory. |
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Corporate bodies who are not resident entities in Portuguese territory without a permanent establishment. |
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Made payable by withholding at source of income received in Portuguese territory. |
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Taxes
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Continent |
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Madeira |
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Resident Entities and permanent establishments of non-resident entities |
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25% |
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4 – 5% (CINM)
25% |
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Resident Entities whose main activities are not commercial, industrial or agricultural |
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20% |
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20% |
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Calculation of tax Taxable profits of entities whose main activities are of a commercial, industrial or agricultural nature, are measured based on the net results of that filing period, under the terms of the accounting standard, as well as positive variation in net equity during that same period, or negative variations in net equity which are not reflected in the income, and adding or subtracting the corrections as per the Corporate Income Tax Code (Código do IRC). | | | | |
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| | | | | Value Added Tax - VAT (IVA) |
Value Added Tax - VAT (IVA), as regulated by Council Directive 77/388/CEE and ensuing alterations, was approved by Decree-Law 394-b/84 dated 26/12 and entered into effect on 01/01/1986.
The Value Added Tax is an indirect tax levied on the supply of goods and services rendered for remuneration. The framework of the Value Added Tax provides for a deduction of Value Added Tax based on the acquisition of goods and services. Each economic agent reverts the difference between Value Added Tax paid and Value Added Tax undertaken to the state. Hence the Value Added Tax goes all the way around the economic circuit to the end consumer, who undertakes the total tax.
Since 1993 intra-community transactions are subject to a special regime. Directive 91/680/CEE dated 16/12, was applied in Portugal by Decree-Law 290/92 dated 28/12 substituting the previous concept of “import” by a new concept - “intra-community transaction”. In this context, import in the legal sense of the term, became the designation exclusively for the entry of merchandise or services from third countries or territories which are not integrated into the European Union’s fiscal framework.
Taxes
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Continent |
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Madeira |
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Regular Tax (Goods and Services in general) |
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23% |
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22% |
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Reduced Tax (includes food and other essential goods, etc.) |
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6% |
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5% |
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Intermediate Tax (includes food services, beverages, etc.) |
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13% |
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12% |
(Read More) | | | | |
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| | | | | Personal Income Tax (IRS) |
The Personal Income Tax (IRS) was published by Decree-Law 442-A /88 dated November 30. The Personal Income Tax is levied on the income of persons, subdivided into 6 categories.
Residents in Portugal are taxed on the totality of their income (in Portugal and abroad) and non-residents are taxed for income obtained in Portugal (according to the different Personal Income Tax categories). A special regime was created in 2009, for non-permanent residents.
(Read More) | | | | |
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| | | | | Property Tax (IMI) is a tax levied on the taxable net-worth value of a building (rural, urban or mixed) located in Portugal, approved by Decree-Law No. 287/2003 dated 12/12.
As a municipal tax, the income goes to the respective municipality, thus substituting the previous Council tax; it has been in effect since 01/12/2003.
Tax Characteristics
The taxable person is the owner, the usufructuary, the building lease holder or the person entitled to the use or fruition of the immovable property on the 31st December of the year to which the tax relates.
In the case of undivided estates, Property Tax is owed by the representative of the beneficiaries.
In legal terms a building is the entire fraction of territory, including water, gardened areas, buildings and constructions of any nature incorporated or built therein with characteristics of being permanent, so long as it is part of one single person’s estate or that of a collective entity, and in normal circumstances, has financial worth.
For the Purposes of Property Tax, each separate fraction under the regime of separate ownership (strata title) in a multiple unit building, is considered to be one building
The taxable net-worth of immovable property is determined by appraisal, as of 12/11/2003, according to the regulations of the Property Tax Code, or according to the Property Tax Code (Código da Contribuição Predial), in remaining instances.
Taxes
In addition to the taxable net-worth value of all the buildings belonging to an individual on national territory, the following taxes also apply:
- Rural Buildings: 0,8%
- Urban buildings which have not yet been appraised according to the new Property Tax regulations: 0,5% to 0,8%
- Urban buildings which have been appraised according to the new Property Tax regulations: 0,3% to 0,5%
- Property belonging to entities domiciled in tax havens: 7,5%
In the case of mixed buildings (comprising a rural part and an urban part), each part will pay its separate taxable net worth.
Under the terms of Decree-Law nº 165/86, dated June 26, companies established in the International Business Centre of Madeira may be exempt from paying a Property tax on properties used as their place of business. | | | | |
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| | | | | Municipal Tax on Real Estate Transfer (IMT) |
The Municipal Tax on Real Estate Transfer (IMT) was approved by Decree-Law 287/2003 dated 12/12 and entered into effect on 01/01/2004 substituting the Sisa Municipal Tax.
This is a tax that levies the profitable transfer of property ownership or parts thereof on real estate (immovable property) located in the Portuguese territory, as well as other transfers which the law considers to be profitable transfers of real estate.
Tax characteristics
As a general rule the Municipal Tax on Real Estate is owed by the person to whom the assets have been transferred, however, there are regulations for other situations.
The profitable transfer of real estate ownership, of parts thereof and the constitution or termination of several types of contractual relationships connected to the asset, located in national territory, as specified by law.
The initiative to settle, as a general rule, falls to the purchaser, who may submit a declaration form duly filled out at any Tax Office before the transmission takes effect.
Taxes
Municipal Real Estate Transfer Taxes are:
a) Property intended for dwelling
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TABLE I - (Continent)
Property Intended for personal permanent housing |
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Amount levied by the Municipal Tax on Real Estate
(Euros) |
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Tax (%) |
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Value to Cut Down
(Euros) |
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Up to 89.700 |
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0 |
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- |
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Between 89.700,01 and 122.700,00 |
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2 |
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1.794 |
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Between 122.700,01 and 167.300,00 |
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5 |
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5.475 |
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Between 167.300,01 and 278.800,00 |
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7 |
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8.821 |
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Between 278.800,01 and 557.500 |
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8 |
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11.609 |
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De 167.300,01 até 278.800,00 |
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Fixed rate of 6% |
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- |
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TABLE I - (Continent)
Real Estate Intended for Other Purposes
(for example, leasing, or Second Homes) |
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Amount levied by the Municipal Tax on Real Estate
(Euros) |
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Tax (%) |
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Value to Cut Down
(Euros) |
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Up to 89.700 |
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1 |
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- |
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Between 89.700,01 and 122.700,00 |
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2 |
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897 |
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Between 122.700,01 and 167.300,00 |
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5 |
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4.578 |
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Between 167.300,01 and278.800,00 |
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7 |
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7.924 |
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Between 278.800,01 and 534.700 |
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8 |
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10.712 |
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Over 534.700,00 |
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Fixed rate of 6% |
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- |
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TABLE II - (Madeira and Azores)
Property Intended for personal permanent housing |
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Amount levied by the Municipal Tax on Real Estate
(Euros) |
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Tax (%) |
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Value to Cut Down
(Euros) |
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Up to 112.125 |
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0 |
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- |
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Between 112.125,01 and 153.375,00 |
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2 |
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2.242,50 |
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Between 153.375,01 and 209.125,00 |
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5 |
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6.843,75 |
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Between 209.125,01 and 348.500,00 |
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7 |
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11.026,25 |
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Between 348.500,01 and 679.875,00 |
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8 |
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14.511,25 |
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Over 679.875,00 |
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Fixed rate of 6% |
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- |
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TABLE II - (Madeira and Azores)
Real Estate Intended for Other Purposes
(for example, leasing, or Second Homes) |
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Amount levied by the Municipal Tax on Real Estate
(Euros) |
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Tax (%) |
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Value to Cut Down
(Euros) |
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Up to 112.125 |
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1 |
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- |
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Between 112.125,01 and 153.375,00 |
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2 |
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1.121,25 |
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Between 153.375,01 and 209.125,00 |
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5 |
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5.722,50 |
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Between 209.125,01 and 348.500,00 |
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7 |
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9.905,00 |
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Between 348.500,01 and 668.375,00 |
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8 |
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13.390,00 |
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Over a 668.375,00 |
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Fixed rate of 6% |
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b) Acquisition of rural building - 5%
c) Acquisition of other urban buildings and profitable transfer – 6.5%
Under the terms of Decree-Law nº 165/86, dated June 26, companies established in the International Business Centre of Madeira may be exempt from paying a Property tax on properties used as their place of business. | | | | |
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Contact |
Feel free to get in touch with us by e-mail, telephone, fax, or on location
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