To ensure our clients are given the best possible service when looking to buy in Portugal, we are passionate about providing all the relevant information for a well informed decision.
To reinforce this commitment, we take you through the buying and selling procedures, the cost of owning property in the area, as well as tax and legal matters. In addition, we explain the benefits of the Non Habitual Residents (NHRs) regime and Golden Visa , along with property management and maintenance implications. To ensure our information on this wide range of subjects is current and correct we have enlisted the assistance of numerous local and international professionals.
Portugal is on the same time zone as Ireland and flights are available from all major airports with additional services over the summer period to Faro and Lisbon.
Portugal launched its highly successful “Golden Visa” scheme in 2012 allowing residency to non-EU residents spending GBP 500,000 or more on property. Investors gain visa-free travel to the 26 countries in the Schengen agreement and after six years can apply for Portuguese citizenship.
The Buying Process
The Letter of Intent and Appointing a Local Lawyer
Once you have viewed the property you would like to buy and your agent has successfully negotiated a deal on your behalf, a professional agent will prepare a ‘letter of intent’. This document clearly states the agreed price, exchange and completion dates, and what is to be included. At the same time, we recommend that you instruct a local lawyer to represent you in the purchase. Your signed letter of intent will be sent to your legal representative as a reference to the agreed terms.
See our complete guide on ‘The Buying Process in Portugal’
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Private Property Ownership
Exchange of contract
Once instructed, your lawyer will begin all the necessary legal searches on the property. These include ensuring the seller has clear title to sell and that there are no outstanding charges on the property. They will then prepare the Promissory Contract (Contrato Promessa de Compra e Venda) which is a legally binding contract between buyers and vendors and is signed by both parties in the presence of a notary/lawyer. The Promissory Contract will state the buyers, the vendors, details of the property, schedule of payments, completion date and any special terms agreed by both parties. Upon signature, it is normal procedure for the buyer to pay the vendor the remaining amount of the 10% deposit, usually via the lawyer’s client account. Under Portuguese law, if the vendor does not fulfill their contractual obligations, they are liable to refund the deposit in double to the purchaser. If the purchaser is in breach of contract, the deposit is non-refundable.
The Final Deed (Escritura) is the official deed of transfer of ownership from the vendor to you. It will be signed on the agreed date at the notary’s office, either by you or by your lawyer if you have opted to give them power of attorney. The balance of the purchase price is now paid and the notary records the transaction in the official record. Once the deed and all other associated transactions are completed, you are then registered as the new owner by your lawyer in the Land Registry (Registo Predial). Buyers should have a copy of this registration.
To purchase a property in Portugal you will need a Portuguese fiscal number. This fiscal number will be for you as a non-resident and therefore has no tax implications in Portugal. Your lawyer will normally advise and help to obtain one.
Property Ownership via corporate structure
Exchange of contract
Many high-end properties are owned by a corporate structure. The property itself is an asset of the company and buyers purchase the company’s shares. These structures are usually domiciled in Malta or Delaware; however, there are several other white-listed jurisdictions around the world. If the property you choose is in one of these structures, your lawyer will carry out the normal legal searches on the property and carry out a due diligence on the corporate structure through a request to the management company that binds them in accordance to their regulations. This will clarify the fees, warranties, representations and legal procedures of the company.
A Share Purchase Agreement will then be prepared and, upon signature by both parties, all the conditions of the transaction are secured and a usual 10% deposit will be paid to the vendor, via the lawyer’s client’s accounts. This transaction takes place under the jurisdiction of the company’s domicile.
The process is simply completed by both parties fulfilling the terms described in the Share Purchase Agreement and the buyers transferring the balance of the purchase price to the vendors, again usually via the lawyers. Afterwards, the respective management company will transfer the share ownership from vendor to purchaser. This process is quick, simple and in English.
The Buying Costs
Lawyers’ fees normally vary from 1% to 2% of the purchase price.
IMT – This is the Portuguese Property Transfer Tax which is payable by the purchaser prior to completion. The rate is variable and is based on a sliding scale according to the price of the property, up to 6.5%. Your lawyer will always advise you of these costs at an early stage. Stamp duty, notary and registration fees are payable by the purchaser upon signature of the deeds at the public notary and at the Land Registry when the transfer of property ownership is registered. The stamp duty is a flat rate of 0.8% of the property price.
In the case of a share transfer process, the IMT, notary, stamp duty and registration fees are not applicable.
Golden Visa Portugal – Golden Residence Permit
Since 9 October 2012, foreign citizens wishing to enter and reside in Portugal have been able to do so under a Golden Visa/Golden Residence Permit rule. It is a fast track for foreign investors from non-EU countries to obtain a fully valid residency permit in Portugal (“Golden Visa”).
Third country citizens attempting residency under the same laws were subject to vague regulations. As of October 2012, the acquisition of an immovable Portugal asset entitles those individuals to a residency title.
For further information on Golden Visa and how to apply get in touch