English speaking accountants in Portugal

Inheritance Taxes in Portugal

Inheritance and Gift Tax in Portugal

 

Portugal does not have a separate inheritance or estate tax. However, Portuguese Stamp Duty (Imposto do Selo) can apply to certain gratuitous transfers, including inheritances and gifts.

 

Stamp Duty on Inheritances

Stamp Duty on gratuitous acquisitions is generally charged at 10% on assets falling within the scope of the Portuguese Stamp Duty regime. However, transfers on death to a spouse or civil partner, descendants or ascendants are exempt from this 10% Stamp Duty charge. The exemption also applies to qualifying gifts to these close family members.

There is an important exception in relation to Portuguese immovable property. The acquisition of ownership or certain rights over Portuguese property is subject to Stamp Duty at 0.8%, including where the beneficiary is a spouse, civil partner, descendant or ascendant. The family exemption applies to the 10% gratuitous-transfer charge but does not exempt the 0.8% charge applicable to transfers of rights in immovable property.

Consequently, for example, where a child inherits a Portuguese property from a parent, there is generally no 10% Stamp Duty on the inheritance, but 0.8% Stamp Duty is payable on the value of the property. The taxable value for Portuguese immovable property is generally based on its Valor Patrimonial Tributário (VPT) at the date of the transfer.

Where Portuguese property is inherited by someone other than a spouse, civil partner, descendant or ascendant, the 10% Stamp Duty on the gratuitous acquisition generally applies in addition to the 0.8% property charge, producing an effective Stamp Duty burden of 10.8% in respect of the property, subject to the detailed rules and exemptions applicable to the particular transaction.

 

Assets Subject to Portuguese Stamp Duty

The Portuguese Stamp Duty rules are broader than Portuguese real estate. In general, gratuitous transfers of movable and immovable property and certain other assets situated in Portugal can fall within the scope of Stamp Duty. This can include, for example, Portuguese-situs securities, certain shareholdings, bank deposits and other rights or assets, subject to the specific statutory rules and exclusions.

There are also specific statutory exclusions. For example, certain life-insurance proceeds, social-security benefits, qualifying pension and savings products, personal or household-use property and certain small gifts are excluded from the 10% gratuitous-acquisition charge.

Accordingly, it is not correct to state that Portuguese inheritance Stamp Duty applies only to assets physically located in Portugal without qualification. The general territorial principle is that Portuguese-situs assets are within the scope of the gratuitous-transfer rules, but the legislation contains specific exclusions and special rules determining whether particular assets are treated as situated in Portugal.

 

Succession Law and Non-Portuguese Nationals

The taxation of an inheritance should be distinguished from the question of which country's succession law applies.

Under Portuguese domestic conflict-of-law rules, succession is generally governed by the deceased's personal law at the time of death. However, for estates falling within the EU Succession Regulation (Regulation (EU) No. 650/2012), the succession is generally governed by the law of the country where the deceased had their habitual residence at death, unless the Regulation provides otherwise. An individual may also, subject to the Regulation's requirements, choose the law of their nationality to govern their succession.

This means that it is not correct to say that a non-Portuguese citizen will automatically have the inheritance rules of their home country applied. The applicable succession law depends on the individual's circumstances, habitual residence, nationality and any valid choice-of-law provisions, as well as the applicable international or bilateral rules.

This distinction is particularly important for individuals who are resident in Portugal but retain another nationality. The succession-law position and the Portuguese tax position should therefore be considered separately.

 

Reporting Requirements

Even where an inheritance is exempt from Stamp Duty because the beneficiary is a spouse, civil partner, descendant or ascendant, the transfer generally still has to be reported to the Portuguese Tax Authority. In the case of an inheritance, the declaration is normally made by the head of the estate (cabeça-de-casal), subject to the applicable procedural rules.

Summary

Portugal therefore has no separate inheritance or gift tax, but Stamp Duty can apply to inheritances and gifts involving Portuguese-situs assets.

The principal rules are:

• Spouse/civil partner, children, grandchildren, parents and grandparents: generally exempt from the 10% Stamp Duty on gratuitous acquisitions.
• Other beneficiaries: generally subject to 10% Stamp Duty on taxable gratuitous acquisitions.
• Portuguese immovable property: generally subject to an additional 0.8% Stamp Duty charge, including transfers between close family members.
• Portuguese-situs movable assets and certain other rights: may also be subject to the 10% charge, subject to statutory exclusions and exemptions.
• Assets situated outside Portugal: are generally outside the Portuguese gratuitous-transfer Stamp Duty charge, subject to the detailed territorial rules.
• Inheritance law: should be analysed separately from taxation and does not automatically follow the beneficiary's nationality or home-country law.

 

For international families, it is therefore important to examine both the Portuguese Stamp Duty position and the succession law governing the estate, particularly where the deceased or beneficiaries are resident in different countries.