Portugal does not charge a conventional inheritance tax since it was repealed in 2004, according to the country’s Tax and Customs Authority.
Instead, we’ll discuss the so-called Imposto do Selo or stamp duty that essentially governs Portugal inheritance tax for certain beneficiaries.
Any mention of Portuguese inheritance tax refers to the said stamp duty.
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Inheritance Tax Meaning
When someone inherits property or assets from a deceased person’s estate, they are usually subject to such tax.
It’s also known as a legacy or succession tax, even death tax.
Portugal Inheritance Tax Explained
Does Portugal have inheritance tax?
Not an inheritance tax, per se, but a stamp duty levied at a 10% flat rate on the value of inherited assets that are in the country.
Do you have to pay inheritance tax in Portugal?
Unless you fall under qualified heirs who are exempt from the stamp duty, you’ll be required to settle the succession tax in Portugal.
How much is inheritance tax in Portugal?
Portugal inheritance tax rate is determined using the entire worth of the assets that the heirs have received.
The asset types and the relationship between the deceased and the beneficiaries will determine the amount of stamp duty that must be paid in Portugal.
While the actual inheritance tax threshold in Portugal is 10%, certain heirs and types of assets are exempt from this.
Property tax or capital gains tax may also be owed if you sell a portion of your estate.
Portugal typically levies a flat 28% tax on capital gains, according to PwC. Only half of the profits are subject to taxes on shares of small and micro businesses that are not listed on the stock exchange.
Portugal levies a flat 28% CGT on the whole gain for non-residents and the same rate for residents, who only pay tax on half of the gain.
As of 2023, gains from assets held for less than a year plus other income are taxed from 13.25% to 48% when taxable income aggregates above 81,199 euros. The flat rate is an option for those under this limit.
Meanwhile, only half of the gain from the sale of real estate is subject to the progressive tax rates for both residents and non-residents, with some exemptions granted to residents.
Portugal inheritance tax rules
Some types of heirs are not required to pay IHT, particularly close family:
- Spouses
- Kids / Grandchildren
- Parents / Grandparents
Stamp duty is not applied to the inheritances of these relatives, who are known as legitimate heirs.
Albeit they must still report the assets they have received for income tax reasons.
The stamp duty is assessed on real estate, movable assets, and shares, among other asset types.
The Portugal forced heirship rules are also implemented as part of the country’s IHT law. Such dictate that some family members must get a minimum share of an estate.
The spouse and immediate descendants of a deceased individual must get at least half of the inheritance.
Heirs have to take quick action upon the decedent’s passing. They must provide the proper paperwork like the death certificate and identity documents, and inform the Tax Authority within three days after the death.
It is also necessary to pay inheritance taxes within three months following the death date. Otherwise, the heirs might be slapped with certain penalties.
Portugal NHR inheritance tax
The Portuguese NHR is neither a residence program nor a visa.
Instead, it is a status that gives residents who are foreign nationals access to advantageous tax treatment. Among the benefits are exemptions from inheritance, wealth, and gift taxes.
All pension income is subject to a 10% tax reduction, and the majority of income from overseas sources is tax-free as long as it is settled in the nation of origin.
Those who now hold NHR status will continue to do so until they have 10 years of residency, despite the NHR scheme’s end in 2024.
Portugal news inheritance tax
As per Reuters, Portugal is thinking about bringing back some tax breaks to draw in expats and to encourage investment in the nation, especially in view of economic difficulties.
Meanwhile, current rules surrounding Portugal inheritance taxation (the stamp duty) remain unchanged at the time of writing.
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