IRS / IRC (“Imposto Sobre o Rendimentos - Rendimentos de Mais-Valias”) Capital Gains Tax (CGT)

 

What is CGT?

A Capital Gain is a profit obtained from the sale of a property that was previously purchased at a lower price.
All Capital Gains and losses must be reported to the Portuguese Revenue by your Fiscal Representative, within a specific period of time.

 

How is CGT determined?

In order to determine the capital gain obtained with the sale of a property, specific information must be taken into account, namely the selling price, purchase price, deductible expenditure and indexation relief. CGT is computed according to the following formula:

 

Which expenditure may I deduct?

In order to compute the Capital Gain obtained with the sale of a property, specific expenditure will be deducted to the selling price.
Costs with the purchase and sale of the property, such as IMT (or former SISA tax), notary and registration charges, may be deducted to the sale price, independently of the period of the time between the purchase and the sale of the property.

If the seller of the property has carried out additions and/or capital improvements / enhancements that increased the value of the property, in the past 5 years, these expenses may also be deducted to the sale price.

 

How is the income tax computed?

Note that non-resident companies not registered in blacklisted jurisdictions will not be subject to taxation on any deemed rental income. They will only be taxed if they actually generate a rental income.

 

When should I file the return and pay IRS or IRC?

Taxpayers must file tax returns without being required to do so by the Portuguese Revenue. This is a task your Fiscal Representative will usually carry out.

 

What are the relevant dates for the rental income tax return and payment?

What are the consequences of late tax return or payment?
Failure to submit a return or pay the due tax on time will result in penalties to be paid as well as interests. The amounts to be paid will depend on the type of taxpayer and on how long the obligations failed to be complied.

 

 



financial investment