Real estate and financial investments are among the assets that are subject to Portugal capital gains tax.
The structure of Portugal CGT remains the same, with distinct rates and regulations for both residents and non-residents.
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Portugal Capital Gains Tax Overview
Do you pay income tax on capital gains?
Yes. Capital gains in Portugal from asset sales are taxable, and the regulations vary according to a person’s residence status.
How is capital gains tax calculated in Portugal?
- Get the sale price, which is the sum that was obtained by selling the asset.
- Determine the acquisition price, which is the asset’s original acquisition cost.
- Add in any expenses, like fees or commissions, related to purchasing the asset.
- Include whatever costs related to upgrades made to the asset during the previous 12 years.
* So, CGT = (sale price−acquisition price−acquisition costs−improvement costs) × tax rate
How much is capital gains tax in Portugal?
Portugal Capital Gains Tax for Residents
Residents will be required to pay CGT or property tax if they offload a portion of their estate.
Capital gains tax in Portugal for residents are generally a flat 28% rate, according to PwC. Only half of the profits on shares of small and micro companies that aren’t traded on the stock exchange are subject to taxes.
Capital Gains Tax in Portugal For Non Residents
Portugal capital gains tax rates for non-residents sit at 13.25% to 48% in 2024, depending on their global income, PwC said. Only 50% of real estate capital gains are subject to such levies.
Non-resident capital gains tax is the same as those of residents.
Interest, dividends, and rental income earned by residents and non-residents are assessed a flat 28% tax too.
Portugal Capital Gains Tax on Shares
Residents are only required to pay taxes on half of any capital gains they make from the sale of shares. The effective tax rate is 28%, flat.
Non-residents pay a flat 28% tax on the full capital gain from the sale of their shares, with no deductions.
Capital gains and losses are reportedly combined for tax purposes as of 2023 if assets are held for less than 12 months and taxable income surpasses 81,199 euros. If such conditions were met, then the tax will range from 13.25% to 48%.
If below the 81K euro threshold, the taxpayer can opt for the flat rate.
Portugal Capital Gains Tax on Property
Only half of the capital gain on a property sale is subject to the 13.25% to 48% progressive income tax rates. This is true for both residents and non-residents, albeit certain exemptions may apply to the former.
Portugal Capital Gains Tax NHR
The special tax scheme for non-habitual residents may be available to a taxpayer who has not been taxed as a resident of Portugal for the preceding five years and who becomes a tax resident in the country for a specific year.
Generally speaking, non-habitual residents pay a flat 20% tax on their job and self-employment income.
When securities are sold, capital gains are typically subject to a flat tax rate of 28%.
A 10% flat tax rate is also applied to pensions from overseas sources, other pension fund contributions, and retirement plans of a similar nature.
Anyone with the NHR qualification is levied as such within a 10-year period.
Portugal Capital Gains Exemption
Income from foreign sources like dividends or property income may be excluded from Portuguese tax, subject to certain conditions.
This exempt income is taken into account for determining the progressive rates that are applied on the remaining taxpayer income.
By reinvesting in a new primary residence within a particular period, tax residents may also be eligible for exemptions in whole or in part.
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