Sovereign Tax Simulation

Sovereign offers a unique ‘tax simulation’ service for both resident and non-resident clients in Portugal.
If I sell my Portuguese property, am I liable for capital gains tax in Portugal?

All property sales must be reported to the Portuguese Tax Department via a capital gains tax (CGT) declaration, whether a capital gain has been realised or not.

For individual owners the capital gains declaration must be filed at the Tax Department between May and June in the year following the sale. Any tax due, levied at a rate of 28%, must be paid upon receipt of the tax demand.

For corporate owners (property held in a company) the tax return must be filed within 30 days of the deed date. Any tax due, levied at a rate of 25%, must be paid at the time of submission.

Sovereign’s accountants can prepare a simulation for you to avoid any nasty surprises after a sale has taken place. We will take into account the following:

• Acquisition costs – including notary fees, registration fee and Property Transfer Tax (IMT – ‘Imposto Municipal sobre a Transmissão Onerosa de Imóveis’, previously SISA);
• Invoices and receipts for structural building works for the previous twelve years;
• Real estate agents’ sale commission invoice – if applicable – which can only be used if the estate agent role is detailed on the deed of sale;
• Energy certificate invoice.

All the above invoices/costs should substantiated by a proper ‘Fatura’ in the property owners’ name with their fiscal numbers and the address of the property being sold, and should also contain the invoice parties’ name, address and fiscal number.

Ask Sovereign for a tax simulation prior to any property sale in Portugal!

I am becoming resident in Portugal, how much tax will I pay on my worldwide income?

All residents of Portugal must declare their worldwide income in Portugal via a yearly tax return in respect of Portuguese personal income tax – ‘Imposto sobre rendimento das pessoas singulares’ or IRS – which must be submitted between May and June of the year following receipt of the income

Potential applicants for Portuguese residency, whether as a regular resident or with Non-Habitual Resident (NHR) status, can request a personal tax assessment and simulation that will consider their worldwide income and indicate their likely tax situation as a resident of Portugal.

Salary, self-employment income, dividends, investment income and pensions will all be assessed by Sovereign’s fully qualified accountants to provide clients with a complete report on their tax situation if they become resident in Portugal. This will enable clients to compare their potential tax situation to that of their home country and will allow them the opportunity, if necessary, to restructure their taxable income and assets accordingly.

• Residents of Portugal with NHR status enjoy special benefits:
• They pay just 10% on their pension income.
• Portuguese source salary or self-employed derived from one of the eligible professions listed below, would be subject to a final flat rate tax of 20%.

Non-Portuguese income of most categories including self-employed income, real estate income (rentals), capital income (interest & dividends) and capital gains on property, will be exempt from Portuguese IRS if the source country has the right to tax that income under the terms of a Double Tax Agreement (DTA) signed between Portugal and that country, or the income is taxed in the other country and is not considered as obtained in Portugal, or the income is taxable in any other country under the OECD Model of Taxation.

Regular residents of Portugal that do not have NHR status are required to pay Portuguese IRS on a progressive scale according to the table below.

Ask Sovereign for a tax simulation to match your personal circumstances!

If I rent out my Portuguese property, how much tax will I pay on the rental income?

All rental income from a Portuguese property must be declared in Portugal, regardless of where the funds are received.

Sovereign’s accountancy team can simulate the likely tax due on rental income in respect of both long or short-term rentals.

Non-residents of Portugal receiving income from short-term rentals will pay tax at a rate of 28% on 35% of the total rental income. The remaining 65% is deemed to be expenses in running the business. This results in an effective tax rate of less than 10%.

For residents of Portugal, the tax rate depends on the rest of your income because the rental income will be regarded as part of your global income to be declared in respect of the Portuguese IRS. The IRS tax rate is on a progressive scale from 14.5% to 48%. Alternatively residents can opt to pay a tax of 28% on their rental income.

Ask for a simulation to assess the rental potential of your property!