For Belgians and Dutch who wish to emigrate to the south, Portugal is certainly a fiscally interesting destination. However, people often forget about wealth tax in Portugal. In this article, you will find more explanations.
Is there wealth tax in Portugal?
There is no general wealth tax in Portugal. However, there is a wealth tax specific to residential property located in Portugal: the Adicional Imposto Municipal Sobre Imóveis or AIMI. This tax is actually a surplus to IMI, the municipal property tax.
Who does the AIMI apply to?
The AIMI applies to anyone who owns all or part of residential property located in Portugal. It therefore concerns both natural persons and companies. Open estates, unincorporated associations, bare owners, usufructuaries and superficies are also targeted.
How do you calculate this wealth tax?
First, you take the cadastral value (Valor Patrimonial Tributário) as the basis of calculation. After that, the calculation differs depending on whether you buy as a natural person or a company.
For private individuals an exemption of 600,000 euros per person applies. A married couple has a total exemption of 1,200,000 euros thanks to the possibility of joint declaration. From 600,000 euros to 1,000,000 euros, you pay at a rate of 0.7%. Between €1,000,000 and €2,000,000, the rate is 1%. Above €2,000,0000, it is 1.5%.
For companies there are no exemptions, but there is a flat rate of 0.4%. If the company has its registered office in a tax haven, the rate is 7.5%.
Finally, properties that were eligible for an exemption from IMI in the previous year have been exempted.
An example. As a married couple, you own several properties in the Algarve. The total cadastral value is 1,300,000 euros. Since the couple can enjoy a total exemption of 1,200,000 euros, the taxable base is 100,000 euros. The applicable rate is 0.7%. The annual tax then comes to 700 euros. However, if the couple owns through a company, the taxable base is €1,300,000. Indeed, there are no deductions for partnerships. The rate is 0.4% and the annual tax is then €5,200.
Deductibility of wealth tax in Portugal
AIMI is deductible in Portuguese personal income tax. However, this is only possible in proportion to the share of the leased property in the total cadastral value, except in case the leasing is part of the exploitation of property for the exercise of a professional activity (category B).
The AIMI is payable based on your property held on 1 January. The assessment/declaration takes place around June and the actual payment around September.