Portugal has long been a popular choice for people, particularly from the colder climates of Northern Europe, looking to purchase a holiday home or a retirement home. Traditionally they have done so using offshore companies, mainly to avoid estate taxes. Unfortunately Portugal, along with some other countries, has made this route considerably less attractive by the imposition of swingeing tax penalties on offshore companies. The magnitude of these penalties can be seen from the examples below,
Real Estate Transfer Tax
This tax is paid by the purchaser, at progressive rates of up to 6% (5% for rural property) on property used exclusively for residential purposes, on the higher of the registered value or the purchase price agreed between the parties. This is usually the purchase price.
For offshore companies this rate has been increased to 15%.
Municipal Property Tax
This is a tax, at a rate set annually, levied by the local authority and based on the registered value. The rates are different for urban and rural properties and the total is typically about 1.6%.
For offshore companies the rate has been increased to 5%
Tax on a Deemed Rental Income
Where a property is owned by an offshore company, it is treated as having produced a rental income, which is charged to income tax, of one-fifteenth of the registered value.
There are other taxes, which have to be taken into account and these are,
Where a property is rented out, the rent is charged to income tax and on a sale 50% of the chargeable capital gain is subject to Portuguese income tax.
There is a stamp duty of 0.8% on the transfer of real estate.
Gifts to a spouse, antecedent or descendant are tax- free but other donations attract a tax of 10%
Fortunately there are territories, which are not on the 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 the penalties on offshore companies. These arrangements may bring with them other benefits such as,
As taxes and the manner in which they are applied change frequently specialist advice should always be taken before entering into any arrangements.
Portugal residency 👉 How to obtain Portugal residency by investment: cost, requirements
✔ Portuguese Golden Visa Program (Portugal Residency) – https://bit.ly/2MlgHTn
✔ Download the presentation on Portugal Golden Visa Program by following this link – https://bit.ly/2OMnY0l
✔ Portuguese residency by investment in real estate.
Golden Residence Program (ARI / Residence permit for investment activity / Golden Visa) – is promoted by the Portuguese Government and offers the possibility for foreign citizens to request a residence permit in Portugal. What are the easily identifiable advantages of this program, and why is it popularity steadily growing? Firstly, geographic expansion, made possible by a residence permit issued by one of the European countries, allows respectable entrepreneurs to revitalize their business. Another reason is the prospect of investing in immovable property of one of the Southern European countries, and thus, keeping the funds invested and yielding a stable profit from renting it. And, of course, it never hurts to have a private accommodation by the Mediterranean Sea.
In this video, we’ll talk about the cost, the advantages and the timeframe of obtaining a Portuguese residency by investment also known as Golden Visa. We’ll also tell you how many visas have been issued under Portuguese Golden Residence Permit Program for 5 years.
0:17 – Cost of a Portuguese Golden Visa
1:24 – Terms of obtaining Portuguese residency by investment
2:26 – Advantages of a Portuguese residence permit
3:31 – Steps of applying for the Portuguese residency
4:07 – Qualifications
4:32 – Statistics
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This video does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.
This video should not be seen as a call to violate one’s country’s existing legislation.
Migronis Ltd. is not responsible for any damages and losses, even indirect, arising in any manner out of the use of this information. We cannot guarantee that the information, statistics, data and facts in this video are still relevant and up-to-date.
You should consult your own tax, legal and accounting advisors before engaging in any transaction, and should not to make decisions based only on this video.