Portugal has drawn investors from all over the world to the country’s real estate industry. Because investors are assured a favorable Property Rental income, Portugal has become more well-known as a place to invest and call home to many.
Investors have been drawn to the real estate market to build and buy properties. This is the ideal time to invest in Portugal because as the globe falls in love with Portugal, a large number of hotels have been created to accommodate the millions of visitors.
But every foreign investor in Portugal needs to be aware of their responsibilities with relation to taxes. Everything pertaining to the Portugal Golden Visa rental revenue will be covered in this post.
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What taxes should I be aware of?
When purchasing a property in Portugal, you should be aware of two important taxes:
- Property acquisition tax (IMT): It can range between 6% and 8%, depending on what kind of property you buy, where in Portugal it is located and at what stage the of its construction is when you buy it.
- Annual property tax (IMI): It can go between 100 and 500 EUR, also depending on similar factors as the IMT.
Additional fees include stamp duty. This is determined at 0.8% of the cost of the investment property.
The €1,000 land registry fees also cover the cost of attorneys’ costs.
Rental income tax in Portugal
If you own a rental property in Portugal as a resident or a foreign investor, you must pay tax on its revenue.
There are various sorts of rental income tax in Portugal; if you looked into this, you could have seen it is a little complicated.
Here is a brief breakdown of Portugal’s rental income categories:
Individual not resident in Portugal
- Rental of a Portuguese building
The tax rate is 25% if you’re a natural person who is not a resident of Portugal and you’re renting a furnished or unfurnished unit.
This is based on the rent you will get, from which the building’s upkeep expenses and property tax are subtracted.
- Furnished tourist accommodation for rent in Portugal
If your revenue exceeds €10,000, you must pay VAT.
However, it is advisable to speak with a qualified accountant because, if your yearly revenue from seasonal rentals does not exceed €200,000, you may be eligible to switch to a simplified income tax.
For a tax base of 35% of the turnover, a non-Portuguese resident will pay tax here at a rate of 25%. This results in a total tax that is around 8.75% of your turnover.
Individual resident in Portugal
- Taxes on income from a Portuguese property
If you live in Portugal and choose to rent out one of your properties there. You will pay 28% tax whether the property is equipped or not.
The receipt of rentals, net maintenance expenses, and property tax serve as the basis for taxes.
- Rental of furnished apartments for tourists
In the event that your revenue reaches €10,000, VAT will apply to you.
On the basis of 35% of turnover, taxes on this kind of real estate rental by a resident in Portugal range from 14.5% to 48%.
Legal person resident in Portugal
- Taxes on property rental income in Portugal
The tax rate is 21% regardless of whether the property is rented out, furnished, or not, and there may also be a municipal tax of up to 1.5%.
Taxes are calculated based on net accounting results, with the possibility of interest and depreciation deductions.
- Rental of furnished apartments for tourists
You will be subject to VAT at a rate of 6% if you purchase an apartment in Portugal on behalf of a business to rent it out to tourists.
If the simplified scheme is chosen, the tax rate is 21% (excluding municipal tax) and the tax base is 4% of the revenue generated by a hotel operation.
Non—Habitual tax residents Portugal
Foreign nationals who reside in Portugal are registered under the Non-habitual Tax Scheme (NHR). Double taxation on income derived from other countries is avoided thanks to this registration.
You can gain from the NHR if you’re a high net worth individual, retiree, or prosperous business with revenue from other nations.
The following is a list of the advantages offered by signing up for Portugal’s NHR tax scheme:
- Tax exemption on all foreign earned income.
- You don’t pay wealth tax.
- You won’t pay inheritance tax.
- Subsidize rate for all income earned in Portugal.
You must pay income tax on your earnings in Portugal. You will still have to pay taxes regardless of whether you are a tax resident or not. The only distinction between residents and non-residents is the cost of living.
Golden Port Visa provides support for Portuguese residency and real estate investments. We have assisted clients worldwide in discovering the appropriate home by offering local knowledge and locating the best real estate investment options.
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