Guidelines: Capital Gains Tax (C.G.T.) 2022
These guidelines are intended only as a summary. Tax laws and regulations change frequently and sometimes unexpectedly. It is strongly recommended that you seek professional advice.
Sale of Property in Portugal
- The sale of a property in Portugal, whether by a resident or non-resident, must be declared to the tax office in Portugal.
- Selling a permanent home in Portugal is subject to specific legislation, and the Capital Gain may be tax-exempt if the sale proceeds are reinvested in another permanent home within any EU country.
Sale of Shares in Companies
- The sale of shares in companies (Portuguese or foreign) must be declared in Portugal only if the seller is a registered resident in Portugal.
Annex G (Capital Gains Tax)
- Residents in Portugal, or those with income arising in Portugal, are required to submit Annex G (Capital Gains Tax) with their general tax return in April/May of the following fiscal year for any of the following capital gains:
- Transfer of any property.
- Transfer of stocks or shares.
- Transfer of rights in commercial, industrial, or scientific sectors.
- Transfer of contractual positions or rights related to purchasing real estate.
- Transfer in derivative financial instruments (except swap gains).
- Transfer of loans, additional and accessory capital in companies.
- Literary rights and winnings from gambling.
Tax Exemptions
- Shares or housing purchased prior to 01/01/1989 (some conditions may apply, e.g., holiday lets – see Bulletin H13).
- Construction plots gifted or inherited before 08/06/1965, as well as rural property.
- Government bonds and debentures.
Note: Exempt sales must still be declared using Annex G1.
Capital Gains on Real Estate (Residents)
- 50% of the Capital Gain is free of tax for residents.
- The income tax rate is calculated on the other 50%, based on the total income for the year.
Deductible Expenses
- Purchase taxes and notary fees.
- Commission paid to an officially registered Real Estate Agent (must be noted on the Sale Deed).
- Major improvements made to the property within 12 years of the sale (with proper documentation).
Reinvestment Scheme (Permanent Home)
- Reinvestment Timeline:
- Money from the sale must be reinvested within 36 months after the sale (or reinvested up to 24 months prior to the sale).
- Partial Reinvestment:
- Capital Gains will be taxed proportionally if reinvestment is not total.
- Reinvestment can be in another permanent home within the EU or EEA (e.g., Norway, Iceland, Liechtenstein).
Real Estate Capital Gains (Non-Residents)
- The flat 28% tax rate on Capital Gains was revoked in 2023.
- Non-residents can now enjoy the same 50% tax-free rate on Capital Gains as residents. The remaining 50% is taxed at marginal personal income rates.
Changes to Share Taxation (2023)
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Short-term Capital Gains from shares and movable property are taxable if:
- The assets were held for less than one year.
- The taxpayer’s total income, including these gains, exceeds €75,009.
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For gains not meeting both criteria, the flat 28% rate continues to apply.
Special Reinvestment Scheme for Retirees
- Available to taxpayers aged 65+ or retired.
- Must reinvest in one of the following within 6 months:
- Life insurance contracts.
- Pension funds.
- Public capitalization regimes.
Capital Gains Tax on Local Lodging (Alojamento Local)
- The final tax amount depends on whether the property is used for personal or commercial purposes when sold.
- It is strongly recommended to consult an accountant for assistance.
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