You can also buy property in Portugal with a Belgian company. This article will explain more about the taxes on renting with a company in Portugal.
Your Belgian company has an economic activity in Portugal
When your Belgian company operates a commercial, industrial or agricultural activity in Portugal, the income is taxed under Portuguese corporate income tax. Also any rental income from property. This is because your company then has a permanent establishment in Portugal. The rate is 21% on the net rental income. However, on the first 15,000 euros of taxable profit, you will pay 17%.
There is also an additional municipal charge of 1.5% (derrama municipal). For companies with taxable profits greater than €1.5 million, there are also levies between 3% and 9%.
Your Belgian company only leases property in Portugal
If your Belgian company only leases property, there is generally no permanent establishment. For example: your company lets residential property. In that case, the non-resident tax applies and a general rate of 25% applies.
Is your tenant a Portuguese company or required to keep accounts in Portugal? If so, the tenant should in principle withholding tax deduct 25% from the rent paid.
If you plan to rent regularly through holiday lets, it is simplified regime (B) in personal income tax an interesting alternative.
You personally live in Portugal?
If you are also a manager resident in Portugal, there may also be tax implications for your Belgian company. If the actual management is in Portugal, your Belgian company may indirectly be considered a Portuguese tax resident. In that case, rental income will be taxed under Portuguese corporate income tax.
As mentioned above, the general rate is then 22.5% (21% + 1.5%) on the taxable net income. From the rental income, you may deduct, for example, maintenance and repair costs, municipal IMI, and any specific costs related to works. You may also reduce the taxable profit by depreciation (excluding land).
Taxes on letting with a company in Portugal: VAT
Renting in Portugal is in principle exempt from VAT. However, there is an exception for holiday rentals. In case of holiday rentals (where you offer certain hotel services), you need a VAT number. You will charge customers 6% VAT. The disadvantage of the VAT requirement is the additional administration. In turn, the advantage is that you enjoy a VAT deduction for your own expenses.
However, if your income is less than €10,000 a year, there is a VAT exemption.
Wealth tax in Portugal
Companies also pay wealth tax or AIMi in Portugal. Unlike individuals, companies cannot enjoy certain exemptions. However, the rate is lower: 0.4%. The tax authorities value property based on the cadastral value (Valor Patrimonial Tributário).