How is the taxable rental income computed?


After quantifying the rental income and the deductible expenditure, the taxable rental income may be calculated, by subtracting the deductible expenditure to the rental income.


What are the applicable rates?

Rental income is taxed in Portugal at a flat rate of 15% for non-resident individuals and companies.
However, in order to comply with EU rules, the Portuguese Revenue has introduced a new procedure starting in 2008, which allows the non-resident individual tax payers to opt between being taxed at the 15% flat rate mentioned above or at the rates applicable to Portuguese resident individuals. The rates applicable to Portuguese tax residents are indicated in Table 7


Income is taxed at the corresponding IRS bracket with a fixed amount being deducted;

- As examples:

a) If a single individual obtains an income of 60.000 €, it will generate an IRS of 25.550,00 €

  • (60.000,00 € x 40%-5.710,38 €).

b) If a couple obtains a total income of 60.000 €, it will generate an IRS of 15.040,24 €

  • First: 60.000,00 € / 2 = 30.000 € to determine the rate to apply;
  • Second: 30.000 € x 34% - 2.679,88 € = 7.520,12;
  • Third: Multiply the value obtain by two to get the total tax for the couple 7.520,12 x 2 = 15.040,24 €)



May I be exempt of CGT?

Please contact your accountant or Tax Adviser to find out these tax repercussions in the country where you are residing.There are certain situations where individuals may get full CGT exemption:

- If you purchased the property before the 1st of January of 1989, the transaction of the property will be exempt of CGT (this does not apply to sites for construction).
-Whenever the sale price is reinvested into another principal residence. This may also apply if you move your residence from Portugal to another EU country, and in that process you reinvest the sale value of your Portuguese permanent residence into the purchase of your new permanent residence in a EU country. However, the Portuguese Revenue may require a declaration from an official entity of your new residence country confirming you reinvested the amount in a new permanent residence. These exemptions do not apply to non-resident companies.


How and when CGT is paid?

Returns of Capital Gains are prepared by your Fiscal Representative without being required to do so by the Portuguese Revenue. Considering the date of disposal will be during the tax year N (1st January – 31st December), then the tax return must be filed and the tax must be discharged on the following dates:

- Individuals must file the tax return before 25th of May – Tax Year N+1 and pay the tax due on reception of bill + (up to) 30 days.
- Non-resident companies must file the tax return and pay the tax due within the date of deed + 30 days.


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 tax payer and on how long the obligations failed to be complied.



financial investment