Portugal, one of the world’s most ancient
nations, is experiencing extensive and dynamic changes, seen in wide
ranging initiatives, political, social, economic, health and well-being.
Eternal land for poets and
adventurers, Portugal is now the home of surfers and architects, enologists and communication engineers, and an insatiable pursuer of new
and sustainable energy solutions.
Europe’s West Coast is a wonderful place to enjoy life thanks to a
healthy, inviting climate, to the friendly, hospitable people and to the
unique and rich cultural heritage. Because we are proud of
welcome our visitors, we are happy, to share our great country with you.
Portugal and the EU including links to
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Portugal the purchase
of a Portuguese property is a regulated process. To ensure that the Portuguese
property you wish to buy is free of debts and restrictive clauses, it is
essential to employ an English-speaking lawyer or solicitor to protect your own
interests. We also recommend that you deal with
Portuguese agent who are
government licensed, they must be identified by an AMI number.
Opening a bank
account in Portugal is not required, but it is highly recommended. Many foreign
banks have branches in Portugal, and they can help in transferring funds and
setting up regular payments for utilities so you won't have to worry about
keeping a close eye on bills when you are out of the country. Property
management companies can work directly with banks to set up these payments, and
they can also arrange to have your
Portuguese property rented out.
fiscal de contribuinte):
As a future owner
of a Portuguese property you need to have Personal Fiscal Number, which you can
obtain immediately at the Local Tax Office in
Portugal. Sometimes, an advantage
in opening a local bank account is that you are automatically assigned a
Personal Fiscal Number by the Local Tax Office when you set-up the bank account,
and therefore may not need to personally visit the Local Tax Office.
Stage 1: Preliminary
"promissory buying and selling" contract:
Once a price has been
agreed with the vendor both parties will sign a preliminary "promissory buying
and selling" contract, called a Contrato
de Promessa de Compra e Venda and the buyer will make a deposit of
10%-30% of the purchase price (except in the case of new constructions where
this deposit will be considerably less). The deposit can vary depending on the
price, location and the property agency that you work with. Many purchasers also
hire a lawyer to help to negotiate a 10% percent deposit, opposed to paying a
larger deposit. The "promissory" contract, similar to an exchange of contracts
in the UK, legally secures the purchase, and is subject to satisfactory searches
having been returned. The Portuguese law protects both parties involved. The
deposit is forfeited if the purchaser does not proceed, and if the vendor
withdraws double the deposit is paid to the purchaser by the vendor. This
contract must be signed in the presence of a Notary.
Before signing the
preliminary "promissory buying and selling" contract, you or your legal
representative will need to obtain the following legal documents:
Certificate (Certidão de Teor):
At the local Land Registry
(Conservatória do Registo Perdial)
check if the seller has the ownership of the property and no one else has those
rights and also if it is free of charges and mortgages. A Registration
Certificate should be issued with a time limit. The Registration Certificate
describes the property's legal history and proof of ownership. The Registration
Certificate is required to perform the completion process at the
document (Caderneta Perdial):
At the local tax office
obtain an official tax document. The official tax document certifies the
inscription of the property for fiscal purposes, the current owner and their
fiscal number, a description of the property, and the property's unique fiscal
number. The official tax document mentions how much the owner will pay in local
yearly taxes. If the property is new then the official tax document will not
exist and instead a temporary certificate will be issued by the building
License of Use (Licença
Obtain a copy of the usage
license from the Local Town Hall. In this document you can check if the property
is approved for the purposes of the original building permission. For
residential property it is necessary to have a habitation license. For non
residential it is necessary to have a commercial or industrial license. This
usage license document needs to be presented at the stage of signing the
"promissory buying and selling" contract.
de compra e venda):
The completion of the
purchase should occur approximately 3 - 4 weeks after signing the "promissory
buying and selling" contract, when the "escritura" contract, called a
escritura de compra e venda is
ready to be signed by both the vendor and purchaser. The signing of the
"escritura" can be carried out on your behalf by appointing your lawyer Power of
At this stage the
purchaser must pay the remaining balance of the purchase price (purchase price
minus the deposit), transfer tax (Imposto
de Sisa) plus notarial fees to the notary advogado. It should be
noted that the remaining balance and transfer tax must be in the notary
advogado's possession before the "escritura" contract is signed. The "escritura"
is the equivalent to the Deeds of the property. From the signing of the
"escritura" contract the purchaser is responsible for the insurance of all the
buildings on the property. It is recommended that the policy includes cover for
fire, flood, storm damage and earthquake damage.
The signing of the
"escritura" ends with the transfer and new registration of the property in the
presence of the official notary. Once this has been done and the property is
registered at the Land Registry Office and Local Tax Office, and is legally
yours. You should make sure that the registration document (Registo)
is in your name and is lodged with the Land office and also in the Local Tax
Office as soon as possible after the signing of the "escritura".
Extra costs when buying property in Portugal:
A variety of fees are payable when you buy a property in Portugal, which usually
add between 10 and 15 per cent to the purchase price, which is
higher than in many other EU countries.
Transfer Tax (SISA):
The purchaser is liable
for transfer tax (known as SISA) and also the notarial, registration and al lawyers
Transfer tax must be paid
just before the "escritura" is signed. The transfer tax is Portugal's equivalent
of the UK's Stamp Duty. Once the transfer tax has been paid a Transfer Tax (Imposto
de Sisa) document is then issued by the tax office, which proves the
payment has been made. The transfer tax to pay depends of the value of the
property that is declared. The following table summarises the transfer tax rates
for the year 2005 on residential property. On rural land the transfer tax is 5
SISA is one of Portugal’s most
controversial taxes and over recent years successive governments have made plans
for legislation to either abolish the tax altogether or to substantially reduce
its rates. However, in spite of much publicity and many hours of parliamentary
time, SISA rates are much as they ever were and look like remaining so for the
immediate future. This does not mean to say, however, that SISA won’t be
abolished in the future.
At present SISA is payable on all resale
properties (i.e. any property that isn’t being sold for the first time) and is
adjusted annually for inflation. In 2002 SISA rates were as shown in the table
Note that SISA isn’t based on a sliding
scale and the rate shown applies to the whole of the value of the property. The
appropriate deduction is made after multiplying the property value by the
relevant percentage. For example, if the declared value of a property is
€150,000, SISA is 26 per cent (€39,000) minus €26,578, which equals a SISA bill
for €12,422 (around 8 per cent). For a property declared as costing €200,000,
SISA would be €20,000 (10 per cent).
SISA is charged at a fixed rate of 8 per
cent on rustic (rural) property where no construction exists. Rural land with
ruins and uninhabitable buildings registered as ‘urban property’ attract SISA at
the rate of 8 per cent on the land and at the usual rates on the construction.
Note, however, that it’s unusual for a ruin
to be valued at more than 8 per cent and many ruins are valued at a lower rate
or are SISA exempt. SISA is payable at usual rates on building plots and land
for construction. SISA must be paid before the signing of the final deed of sale
( escritura) and is usually paid a few days earlier. The receipt must be
presented to the notary at the completion and is retained by him (so obtain a
copy for your records).
If the sale isn’t made in euros, a
statement must be obtained from a local bank stating the rate of exchange for
the SISA calculation. If you’re buying a new apartment or townhouse and are the
first purchaser, a proportion of the original SISA paid on the land should be
deducted from the SISA payable (but you must apply for this concession). If you
pay SISA on a property you may not be required to pay property tax for a period,
depending on the property’s rateable value.
When looking at
perspective Portuguese properties to buy, you should ask what the declared value
of a property is. Often the
Portuguese property is not registered at the price
you are paying but at a lower value. In this case you could end up paying less
transfer tax than on a similar property.
Lawyers can advise further on a
specific case. If you are having a property built, it is worth considering
buying the plot and paying for the construction separately. This way the
transfer tax is only payable on the land.
tax ( IVA) of 19 per cent is levied on new properties purchased from a
developer or builder and being sold for the first time. VAT should be included
in an advertised or agreed price and not added afterwards, but you should check
The fees for
the notary who officiates at a sale are fixed by law and used to depend on the
sale price. However, new legislation has introduced a fixed system under which
notaries charge around €153 per transaction plus additional charges of €1.25 per
amendment or clause in the document. There may also be other additional costs
(usually small amounts).
for the conveyance involved in a property sale are usually 1 to 2 per cent of
the purchase price for an average property. The actual amount depends on the
work involved, although there’s usually a minimum charge, e.g. €1,000. Fees,
which should be agreed in writing beforehand, are much lower if a lawyer is
engaged only to vet the sales contract.
Engaging a lawyer and paying legal fees
is optional, although it’s highly recommended.
If you take out a
Portuguese mortgage a further cost will be passed on to you by your lawyer for
registering the charge of the lender with the land registry. Valuations are
carried out by the lenders and you as the purchaser will be liable for the fees.
It is advisable to make a
will with a
Portuguese lawyer to cover such items as the property, your cars,
your Portuguese bank accounts and the contents of the property. By doing this
bureaucratic complications should be avoided.
registration fees for registering a deed of sale at the land registry (
conservatória do registo predial) are approximately 0.75 to 1 per cent of
the property’s value. The deed registration fee is paid to the notary with his
fee for completing the sale.
If you employ
a surveyor to inspect a building or plot of land, the fee will depend on the
type of survey, any special requirements and the value of the property. A
homebuyer’s survey and valuation for a property valued at up to €200,000 is
usually from around €550 and a full structural survey on the same property is
agent’s fees are usually between 5 and 10 per cent of the selling price,
depending on the cost of the property and the type of contract, and are paid by
the vendor. However, they’re usually allowed for in the asking price, so in
effect are paid by the buyer.
If you buy a
new property you may need to pay for electricity, gas and water connections, and
the installation of meters. If they aren’t included in the price, you should ask
the builder or developer to provide the cost of connection to all services in
may include a commitment fee, an arrangement fee (usually 1 per cent of the loan
amount), an administration fee (e.g. 1 per cent), and an appraisal or valuation
buying new and old Portuguese properties:
Due to the high demand for
new Portuguese property, most purchasers buy properties "from spec" from
Portuguese property developers. This means that the purchaser will buy new
Portuguese properties from the plans, and select which property they want within
a particular development. Typically, purchasers who buy a new property have to
make regular instalments during key stages of the property development (opposed
to paying for the property when it is complete), and an initial deposit of 5% to
10%. The initial deposit and regular instalments vary from one Portuguese
property developer to the other.
If you have to make
regular stage payments to the
Portuguese property developer you should ensure
that you receive bank guaranties for each payment. These bank guaranties protect
you in the unlikely event that the
Portuguese property developer has financial
difficulties before the property is transferred to your name.
Vendors, a Quick sale of your property