Source: Adobe Stock Author: Redaction What is the VPT and why is it fiscally important? The Valor Patrimonial Tributável (VPT) is the fiscal value assigned by the Portuguese tax authorities to each property. This value results from an objective assessment based on legal criteria such as location, area, layout, age, quality, and comfort of the property. The VPT is crucial because it serves as the basis for calculating several taxes, namely the IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis) and the IMI (Imposto Municipal sobre Imóveis). Understanding how the VPT affects IMT and IMI is essential for any buyer or owner, as it can have a direct impact on the costs associated with acquiring and maintaining a property. The VPT is periodically updated by the tax authorities and may change in cases of renovation, revaluation or legislative changes. How the VPT affects IMT The Imposto Municipal sobre Transmissões Onerosas de Imóveis – IMT is the tax paid at the moment of property purchase. The IMT is calculated based on the higher amount between the purchase price and the VPT of the property. This means that if the VPT is higher than the purchase price, the IMT will be calculated on the VPT. If the purchase price is higher, that is the amount used for tax purposes. For example, if you buy a property for €180,000 but the VPT is €200,000, the IMT will be calculated on €200,000. The tax is determined using a progressive rate table, which varies depending on the type of property (main residence, secondary, rural, etc.) and its value. Formula: IMT = [Applicable rate × higher value (purchase price or VPT)] – deduction amount The fact that the VPT may be higher than the market value of the property may surprise many buyers, leading to a higher-than-expected tax burden. Therefore, it is essential to check the VPT before proceeding with the purchase and simulate the IMT amount payable. How the VPT affects IMI The Imposto Municipal sobre Imóvel – IMI is an annual tax that all property owners must pay. The IMI amount is calculated by applying the municipal tax rate to the VPT of the property. In other words, the higher the VPT, the higher the annual IMI payment. IMI rates vary between 0.3% and 0.45% for urban properties, depending on the municipality, and may differ for rural properties. For example, if your property’s VPT is €150,000 and the municipal IMI rate is 0.35%, the annual IMI would be €525. If the VPT is updated to €180,000, the IMI would increase to €630. Formula: IMI = Municipal IMI rate × VPT The VPT may be updated automatically by the tax authorities every three years, or whenever there are significant changes to the property, such as renovations or change of use. The owner may also request a revaluation of the VPT if they believe the assigned value does not reflect the true state of the property. How the VPT affects IMT and IMI: Frequently Asked Questions How can I find out the VPT of my property? The VPT is listed in the Caderneta Predial, available via the Tax Authoritys Portal or from the local tax office. Is the VPT the same as the purchase price? No. The VPT is a fiscal value assigned by the tax authorities, while the purchase price is the actual transaction value. For IMT purposes, the higher of the two is used. What happens if the VPT is updated? If the VPT increases, the IMI amount will also increase. For IMT, if you buy a property and the VPT is higher than the purchase price, the tax will be calculated on the VPT. Can I request a revaluation of the VPT? Yes, you can request a revaluation of the VPT from the tax authorities, especially if you believe the assigned value does not reflect the true state of the property. A reduction in VPT could lead to a lower IMI. Does the VPT affect other taxes? Yes, in addition to IMT and IMI, the VPT is also used as the basis for calculating Stamp Duty when buying a house, if the VPT is higher than the purchase price. Practical examples of how the VPT affects IMT and IMI Imagine you intend to buy a flat for €220,000, but the VPT recorded by the tax authorities is €240,000. In this case, both the IMT and the Stamp Duty will be calculated on €240,000, as it is the higher value. If, after the purchase, the VPT is updated to €250,000, the annual IMI will also increase accordingly. If the property undergoes improvement works that increase its usable area or comfort level, the VPT may be revised upwards, resulting in a higher IMI. On the other hand, if the property deteriorates or loses value, it may be possible to request a revaluation to reduce the VPT and, consequently, the IMI. Final considerations Understanding how the VPT affects IMT and IMI is essential for properly planning the purchase and ownership of property in Portugal. The VPT can significantly influence the amount of tax payable, both at the time of acquisition and throughout the years of ownership. It is advisable to always check the VPT before buying a house, use the available simulators and, if necessary, seek professional advice to ensure that you are making informed decisions and meeting all tax obligations. Keeping the VPT updated and aligned with the true condition of the property can lead to considerable savings over time.
Source: Adobe Stock Author: Redaction What is the Taxable Patrimonial Value (VPT)? The Taxable Patrimonial Value, known as VPT, is the value assigned by the Tax Authority to each property for tax purposes in Portugal. This value serves as the basis for calculating various taxes, namely IMI (Municipal Property Tax), IMT (Municipal Tax on Property Transfers), and Stamp Duty. The VPT reflects an estimate of the market value of the property, calculated according to objective and standardised criteria defined by law, and is periodically updated by the Tax Authority. The VPT does not correspond to the buying and selling price of the property but rather to a fiscal value. The deed value is only relevant for tax purposes if it is higher than the VPT; otherwise, the VPT prevails for calculating the due taxes. How much is the VPT and how is it calculated? The calculation of the VPT is made based on a formula defined in the Municipal Property Tax Code (CIMI). This formula considers several factors, such as the property area, base construction value, location, quality and comfort, age of the property, and its use. The general formula for urban buildings is: VPT = Vc × A × Ca × Cl × Cq × Cv Where: Vc : Base construction value per square metre A : Gross construction area plus dependent areas Ca : Allocation coefficient (type of property use) Cl : Location coefficient (geographical area) Cq : Quality and comfort coefficient (lift, garage, etc.) Cv : Wear and tear coefficient (age of the property) Each of these factors is periodically updated by the Tax Authority, reflecting the conditions of the property market and the characteristics of the property. The VPT can be consulted in the Property Tax Register (Caderneta Predial), available on the Finance Portal. Applicable legislation The VPT is regulated by the Municipal Property Tax Code (CIMI), approved by Decree-Law no. 287/2003, of 12 November, with successive amendments. The legislation defines the evaluation criteria, applicable formulas, and procedures for updating or reassessing the patrimonial value of properties. The Tax Authority can update the VPT every three years or whenever there are relevant changes to the property (works, change of use, etc.). The owner can also request a reassessment if they consider the assigned value does not reflect the property’s reality. Frequently asked questions about the VPT What is the VPT and what is it for? The VPT is the fiscal value assigned to the property by the Tax Authority and serves as the basis for calculating taxes such as IMI, IMT, and Stamp Duty. How can I find out the VPT of my property? You can consult the VPT in the Property Tax Register of the property, available on the Finance Portal or at the local Finance office. Is the VPT the same as the deed value? No. The VPT is a fiscal value assigned by the Tax Authority, while the deed value is the buying and selling price. For tax purposes, the higher value between the VPT and the deed value is considered. Can the VPT be changed? Yes. The VPT can be updated automatically by the Tax Authority every three years or at the owner’s initiative by requesting a reassessment. Changes to the property, such as works or change of use, may also lead to VPT updates. Why is it important to know the VPT before buying a house? The VPT determines the amount of taxes to pay, such as IMI, IMT, and Stamp Duty. Knowing the VPT allows you to anticipate tax charges and avoid surprises at the time of purchase. Is the VPT used for purposes other than taxes? Yes, the VPT may be considered in inheritance processes, property divisions, and patrimonial valuations, serving as an official reference for the property’s value. Final considerations The Taxable Patrimonial Value is a central concept in real estate taxation in Portugal. Knowing what the VPT is, how it is calculated, and its importance allows you to make informed decisions when buying, selling, or owning properties. Before buying a house, always consult the VPT in the Property Tax Register and assess the impact of this value on the taxes payable. If you consider the VPT to be misaligned, you can request a reassessment with the Tax Authority, ensuring fairer taxation appropriate to the property’s reality.
Source: Adobe Stock Author: Redaction IRS for self-employed workers is a topic that raises many questions, especially for those issuing green receipts or providing freelance services. Complying with tax obligations correctly is essential to avoid penalties and ensure you benefit from all possible deductions. This detailed guide explains step by step how to prepare, complete, and submit the IRS return for self-employed workers, covering the main tax regimes, deadlines, deductible expenses, and mandatory annexes. Who must file an IRS return as a self-employed worker? All self-employed workers, regardless of income amount, are required to file an IRS return if they carried out a commercial, industrial, agricultural, forestry, or livestock activity. Even those who issued only one receipt (isolated act) must submit an IRS return if the amount exceeds four times the Social Support Index (IAS). In 2025, you are only exempt if the isolated act issued in 2024 is under €2,037.04. Submission deadlines and consequences of delay The IRS return for self-employed workers must be submitted between 1 April and 30 June, exclusively through the Tax Authority’s online portal. Late submission may result in consequences such as delays in refunds, loss of tax benefits, ineligibility for joint taxation, and fines ranging from €25 to €3,750 or more in cases of serious omissions or inaccuracies. Simplified regime or organised accounting? Self-employed workers can choose between two tax regimes: Simplified regime Applies to those with gross income below €200,000 annually and whose balance sheet does not reach €500,000. In this regime, a portion of income is automatically considered as expenses (usually 25% for services and 15% for commercial or industrial activities). This is the simplest regime, with fewer obligations and no need for a certified accountant. Organised accounting Mandatory for annual income over €200,000. It allows deduction of all actual business-related expenses, but requires hiring a certified accountant and maintaining rigorous documentation. Choosing the appropriate regime depends on the volume of expenses and complexity of the activity. For less complex activities, the simplified regime is usually more advantageous. What income must be declared in the IRS for the self-employed? The income to declare includes all amounts earned through service provision, sales, intellectual property, compensation related to the activity, grants, subsidies, and isolated acts. These fall under IRS category B. Taxation under category A: is it possible? In cases where all green receipts are issued to a single client, it may be possible to opt for taxation under category A, normally applied to employees. This option may be advantageous in some cases, so it is advisable to simulate both situations before submitting the return. Deductible expenses in the IRS for self-employed workers The deductible expenses depend on the chosen tax regime: Simplified regime The Tax Authority automatically assumes that a portion of income corresponds to expenses, so it is not necessary to justify all costs. However, for annual income over €27,360, it is mandatory to present business expenses equivalent to at least 15% of gross income. Organised accounting Allows deduction of all documented and actually incurred expenses, as long as they are directly related to the activity. Examples include: Social Security contributions, rents of business-use properties, staff expenses, purchase of goods and services, utilities, insurance, vehicles, professional memberships, and travel costs. To be deductible, expenses must appear on invoices with the self-employed workers taxpayer number and be validated on the e-fatura portal. If not validated on time, they may be manually entered in annex H of the tax return. Filling in the IRS for self-employed workers The declaration is submitted online through the Tax Authority’s portal. Main steps: Access the portal with your taxpayer number and password. Select the IRS submission option (automatic or manual model 3). Fill in the mandatory cover sheet for all taxpayers. Mandatory annexes: Annex B: For category B income under the simplified regime or isolated acts. Annex C: For income under organised accounting. Annex H: For deductions and general expenses. Annex SS: To declare income to Social Security. Other annexes may be required depending on whether there is capital income, capital gains, rental income, or foreign income. Automatic IRS: who is eligible? Automatic IRS can be used by self-employed workers under the simplified regime (excluding “other service providers”) who issued all invoices through the Tax Authority portal. However, exclusions apply: non-residents, those with foreign income, or taxpayers with outstanding tax debts cannot use it. It is important to verify all information before submitting the automatic return. Validation and justification of expenses Expenses must be validated on the e-fatura portal, indicating whether they are fully or partially related to the activity. If not validated on time, they can be manually added to the tax return by category in annex H. Final recommendations to avoid mistakes and penalties Keep and validate all invoices with your taxpayer number. Choose the tax regime best suited to your profile. Carefully fill in all mandatory annexes. Submit the return within the legal deadline. If in doubt, consult a certified accountant. Correctly complying with IRS obligations for self-employed workers is essential to avoid fines and maximise available tax benefits. With good organisation and attention to detail, it is possible to meet all tax obligations without complications. By following this guide, you will be able to complete your IRS return for self-employed workers securely, taking full advantage of all benefits and avoiding unpleasant surprises.
Source: Adobe Stock Author: Redaction What is Stamp Duty and when does it apply? Stamp Duty is one of the oldest taxes in the Portuguese tax system and remains mandatory in various transactions, including house purchases. When paying Stamp Duty on buying a property, you are fulfilling a tax obligation based on the transaction value or the taxable patrimonial value (VPT), whichever is higher. This tax is due both on the deed of sale and, if applicable, on the mortgage contract. Paying Stamp Duty is mandatory and must be done before formalising the deed. Without proof of payment, the purchase cannot be completed. Additionally, if you use bank financing, you must pay Stamp Duty on the loan amount and on any associated fees. Legislation and recent changes Stamp Duty is regulated by the Stamp Duty Code, approved by Law no. 150/99 of 11 September, and updated by several amendments, notably Law no. 31/2024. The General Table of Stamp Duty, annexed to the code, defines applicable rates and taxable situations. In August 2024, an important change came into effect: young people up to 35 years old buying their primary residence may benefit from full or partial exemption of Stamp Duty, provided they meet certain conditions (not owning a home nor having owned one in the previous three years, and not being dependents for IRS purposes in the purchase year). This exemption applies only to the purchase, not to the mortgage. How to calculate and pay Stamp Duty on house purchase The amount payable corresponds to 0.8% of the deed value or the VPT, whichever is higher. For example, if you buy a house for €200,000 and the VPT is €180,000, you pay 0.8% on €200,000, i.e., €1,600. Payment is made before the deed, usually at the Tax Office or via the online portal. If you take out a mortgage, you must pay Stamp Duty on the financed amount. For contracts of five years or more, the rate is 0.6%; for contracts between one and five years, 0.5%; and for contracts under one year, 0.04% per month or fraction thereof. For example, a €120,000 loan over 30 years incurs €720 Stamp Duty (€120,000 x 0.6%). Also, all bank fees linked to the loan (processing, appraisal, formalisation, etc.) are subject to Stamp Duty at 4%. This tax on fees is automatically charged by the bank and paid to the State. Exemptions and special cases The exemption on Stamp Duty for house purchases applies, since August 2024, to young buyers up to 35 meeting the legal criteria. There is no exemption for properties valued over €633,453. The exemption does not cover mortgages, so even if exempt on purchase, Stamp Duty on financing is due. Public entities, social security institutions, and some public utility bodies may be exempt in specific cases as set by law. Frequently asked questions about paying Stamp Duty What does Stamp Duty cover on house purchases? It applies to the transaction value or VPT, whichever is higher, and to any mortgage amount if applicable. When and how should I pay Stamp Duty? Payment must be made before the deed, at the Tax Office or online. For mortgages, the bank withholds and pays the tax to the State. Is there an exemption from paying Stamp Duty? Yes, young buyers up to 35 may have full or partial exemption on the purchase, if legal conditions are met. No exemption exists for mortgages. Do I have to pay Stamp Duty every year? No. Stamp Duty on house purchase is a one-off payment before the deed. Mortgage Stamp Duty is also a single payment at contract signing. What happens if I don’t pay Stamp Duty? Without payment, the deed cannot be completed and the purchase cannot proceed. How can I confirm the Stamp Duty amount to pay? You can check the exact amount at the Tax Office, use online simulators, or ask your bank or solicitor for assistance. !function(){use strict;window.addEventListener(message,(function(a){if(void 0!==a.data[datawrapper-height]){var e=document.querySelectorAll(iframe);for(var t in a.data[datawrapper-height])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data[datawrapper-height][t]+px;r.style.height=d}}}))}(); Paying Stamp Duty is a mandatory and essential step when buying a house in Portugal. Lack of knowledge about rates and payment deadlines can delay or jeopardise the process. Get informed in advance, consult updated legislation, and seek expert advice if needed to ensure you meet all fiscal obligations linked to your house purchase.
Source: Adobe Stock Author: Redaction IMT (Municipal Tax on Onerous Property Transfers) is one of the most important and costly steps for those buying a house in Portugal. This municipal tax applies to the onerous transfer of property, meaning whenever there is a purchase and sale of a house, land or any other property, the buyer is required to make this payment before signing the deed and officially acquiring the property. 1) What is IMT and who has to pay it? 2) How is IMT calculated? 3) When and where is IMT paid? 4) Who is exempt from paying IMT? 5) What happens if IMT is not paid? 6) Is IMT refunded if the deal falls through? 7) What is the difference between IMT and Stamp Duty? 8) Can I pay IMT in instalments? 9) How to apply for IMT exemption? What is IMT and who has to pay it? IMT is a municipal tax due whenever a property is acquired in Portugal, whether for main residence, second home, rental, business use or land. The responsibility for payment lies with the buyer and it must be completed before the deed is signed. How is IMT calculated? The IMT amount depends on the type of property, its purpose (main residence, second home, rental, etc.), location and the purchase price or Taxable Asset Value (VPT) – the higher of the two is used. The calculation is progressive, with rates and brackets set annually by the government. In 2025, the first €104,261 of the property value for a main residence is exempt from IMT. Above this threshold, progressive rates apply, ranging from 2% to 8% for main residence and up to 6.5% for second homes or rental properties. Calculation example for main residence (Mainland, 2025): !function(){use strict;window.addEventListener(message,(function(a){if(void 0!==a.data[datawrapper-height]){var e=document.querySelectorAll(iframe);for(var t in a.data[datawrapper-height])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data[datawrapper-height][t]+px;r.style.height=d}}}))}(); IMT is calculated using the formula: IMT = (Applicable rate x Taxable value) – Deductible amount The applicable rate considers the marginal rate of the corresponding bracket, but there is also an average rate that is not used in the calculation: Marginal Rate This is the maximum percentage applied to the portion of the property value that falls within a specific tax bracket. Whenever the property value enters a new bracket, the marginal rate of that bracket is applied only to the portion of the value that exceeds the lower limit of the previous bracket. Example: If a property costs €200,000 and the bracket between €194,458 and €324,058 has a marginal rate of 7%, this rate is only applied to the portion of the value above €194,458. Average Rate This corresponds to the average percentage of tax actually paid on the total value of the property within a given bracket. It is calculated by dividing the total tax payable by the total value of the property, resulting in a percentage lower than the marginal rate, except in the highest brackets where a flat rate applies. It helps to understand, in practical terms, the effective tax burden on the total transaction value. When and where is IMT paid? IMT must be paid immediately before signing the property purchase deed. The buyer must present proof of payment at the time of the deed. Payment can be made in person at the Tax Office or online via the Tax Portal, by completing IMT Form 1, which generates the payment reference. Who is exempt from paying IMT? In 2025, the following are exempt from IMT: Properties for main residence up to €104,261. Young people up to 35 years old purchasing their first main residence, up to a maximum of €324,058. Other exemptions include properties for long-term rental, urban rehabilitation, resale purchases, among others provided by law. What happens if IMT is not paid? If IMT is not paid, the purchase deed cannot be executed, preventing the property transfer to the new owner. Non-payment may also lead to fines and interest charges. Is IMT refunded if the deal falls through? If the transaction does not go ahead and the property is not acquired, it is possible to request a refund of the IMT paid, by submitting evidence to the Tax Authority. What is the difference between IMT and Stamp Duty? IMT applies to the transfer of property, while Stamp Duty is a separate mandatory tax, usually 0.8% of the purchase price, also paid before the deed. Can I pay IMT in instalments? IMT must be paid in a single instalment before the deed. Instalment payments are not currently available. How to apply for IMT exemption? IMT exemption can be automatic if the criteria are met (e.g. property value below the exemption threshold). In other cases, it must be requested from the Tax Office, with the necessary documentation. Paying IMT is an unavoidable and financially significant step in the process of buying a house in Portugal. It is essential to understand the rules, brackets and exemptions in place for 2025 to plan your budget effectively and avoid surprises at the deed stage. In addition to IMT, don’t forget other mandatory costs such as Stamp Duty and notary and registration fees. Timely preparation and clarification of all doubts ensure a safer and more transparent home buying process.
Source: Adobe Stock Author: Redaction Buying a house in Portugal involves not only the property price, but also a series of bank fees, taxes and legal expenses that must be considered from the outset. Understanding all these costs is essential to avoid surprises and plan your budget accurately. Initial bank fees when buying a home When you apply for a mortgage, the bank charges several initial fees necessary for processing and formalising the loan: Dossier fee (or opening fee) This is paid to the bank for processing and analysing your mortgage application. The amount can vary between €200 and €400, depending on the bank. This payment is made at the start of the process, regardless of whether the loan is approved or not. Property valuation fee This covers the cost of having the property assessed by a certified surveyor so that the bank can determine the actual value of the property to be used as collateral. This fee usually ranges between €200 and €300. It is paid after the valuation is scheduled, but before final approval of the loan. Formalisation fee Covers administrative and bureaucratic costs related to preparing the mortgage contract. It can range from €100 to €300. It is charged at the time of signing the loan agreement. Solicitor and document preparation fee Some banks also charge for the drafting of legal documents and solicitor services to handle all necessary paperwork for the deed. This fee can go up to €200, depending on the bank and services contracted. Early repayment fee If you want to pay off your loan early, a fee may apply. However, until the end of 2025, this fee is suspended for variable rate mortgages. For fixed-rate contracts, the fee can be up to 2% of the capital repaid. Mandatory taxes and fees when buying a home In addition to bank fees, there are taxes and legal fees that are mandatory when purchasing a property with a mortgage: IMT (Municipal Property Transfer Tax) This is a tax paid to the State every time a property is purchased. The IMT rate depends on the purchase price, the type of property (urban or rural) and its intended use (primary or secondary residence). For primary residences, rates are progressive and exemptions may apply to lower-value homes. IMT must be paid before the deed, as it is a requirement for the sale and purchase contract. Stamp duty There are two occasions when stamp duty is payable: On the property purchase: 0.8% of the propertys value, payable at the time of the deed. On the mortgage: 0.6% of the loan amount, payable when the mortgage contract is signed. Deed costs The deed is the public act that formalises the sale and purchase of the property. Costs generally range from €500 to €1,000, depending on the property’s value and the notary or Casa Pronta service chosen. Payment is made on the day of the deed. Land registry After the deed, the property must be registered in the new owner’s name. The standard cost of land registration is €225 (when using the Casa Pronta service), but may vary depending on the service used or if there are additional acts to register. Certificates and documentation These include land registry extracts, property tax documents and other paperwork required for the deed and registration. Total costs can range between €50 and €200, depending on the number of documents and institutions involved. When and how are these costs paid? Bank fees are paid at different stages: some at the beginning of the mortgage process (such as the dossier and valuation fees), and others when signing the loan agreement (such as the formalisation and document preparation fees). IMT and the stamp duty on the purchase must be paid before the deed, and proof of payment must be presented on the signing day. Stamp duty on the mortgage is paid when the mortgage contract is signed. Deed and land registry fees are paid on the day of the deed or immediately afterwards, depending on the service used. Certificates and documents are acquired during the process, as required by the relevant authorities. Expected amounts and percentages Initial bank fees Between €500 and €1,000, depending on the bank and services chosen. IMT Can range from exemption (for lower-value properties) to several thousand euros, depending on the purchase price and the property’s intended use. Stamp duty 0.8% of the property’s value (purchase) + 0.6% of the mortgage amount (financing). Deed and registration costs Usually between €700 and €1,500, but may be higher for high-value properties or more complex processes. Certificates and documentation Between €50 and €200. In total, the initial costs associated with buying a property with a mortgage can represent between 7% and 10% of the purchase price, depending on the property value, loan amount and services chosen. Before proceeding with a property purchase, it is essential to calculate all associated costs, including bank fees, taxes and legal expenses. This will help you avoid unexpected expenses and make a more informed and secure financial decision. Plan your budget accordingly and use online calculators to get estimates tailored to your specific case.
Source: Adobe Stock Author: Redaction 1) What is IMI and why is it rising? The Municipal Property Tax (IMI) is an annual mandatory tax for property owners in Portugal. In 2025, thousands of owners will face a significant increase in this tax, resulting from the automatic three-year update of the Taxable Patrimonial Value (VPT), carried out by the Tax Authority. This revision takes into account inflation over recent years and ensures that the value of properties for tax purposes follows market price trends. 2) How much will IMI increase in 2025? For residential properties, IMI will increase by 9.75% compared to the previous year. For buildings intended for services, commerce and industry, the increase will be higher: 13%. These percentages reflect the cumulative inflation impact between 2021 and 2023, which exceeded the previous three-year period. The IMI increase does not represent a heavier tax burden in itself, but rather an automatic update of property values for taxation purposes. 3) Municipal councils can mitigate the IMI impact Municipal councils have the option to reduce the applied IMI rates, which can lessen the impact of this increase. In 2025, in a context of local elections, 44 municipalities decided to reduce taxation, while more than 200 apply the minimum rate of 0.3%. The IMI rate can vary between 0.3% and 0.45% of the taxable patrimonial value, with municipalities under financial recovery able to apply up to 0.5%. 4) Impact of the IMI increase on families and businesses The IMI increase will mostly affect households that do not benefit from exemptions and who have taken out loans to buy homes. For example, if an owner currently pays 500 euros in IMI, the bill will rise by 48.75 euros, totalling 548.75 euros if the municipality keeps the same rate. For buildings used for commercial, industrial or service activities, the impact will be even greater: an IMI of 2,000 euros will cost 2,260 euros, due to the 13% rise. 5) Who does the IMI increase apply to? This IMI rise only applies to properties whose VPT was reassessed in 2024, as part of the automatic three-year review provided for in the IMI Code. Thus, only properties last evaluated in 2021 will now be subject to the increase. The year of property acquisition marks the start of the three-year period for updating the VPT and consequently calculating IMI. 6) How is the taxable patrimonial value (VPT) updated? The update of the taxable patrimonial value is done automatically by the Tax Authority, regardless of any request by the owner. For residential properties, only 75% of the update coefficient is applied, explaining the lower increase compared to commercial, industrial or service buildings, where the full coefficient is applied. 7) IMI payment deadlines in 2025 IMI payment deadlines in 2025 vary according to the amount due. If the amount is equal to or less than 100 euros, the payment must be made in full in May. For amounts between 100 and 500 euros, the tax may be paid in two instalments, in May and November. For amounts over 500 euros, payment can be made in three instalments: May, August and November. Although the law allows this splitting, the owner may opt to pay the IMI in full in May. 8) IMI rates and special cases By 31 December of the previous year, municipal councils must notify the Tax Authority of the IMI rate to be applied in 2025. The minimum rate is 0.3% and the maximum 0.45%, except for municipalities in financial recovery which may apply up to 0.5%. Until 2024, only the Vila Real de Santo António council applied the maximum rate, but this year managed to reduce it to 0.45% after lowering municipal debt. 9) IMI exemptions and special cases IMI exemption remains possible for certain cases provided by law, such as primary residences with taxable patrimonial value up to a certain limit, or for properties of people with very low income. However, most owners will have to bear the tax increase this year. 10) Conclusion: the importance of IMI for owners and local authorities The IMI increase in 2025 is inevitable for many owners, but the impact can be softened if the municipality decides to reduce the rate. The municipal property tax remains one of the main expenses for those owning homes or commercial buildings in Portugal. The three-year review of the taxable patrimonial value, considering inflation, ensures that property values for tax purposes follow market price trends, maintaining fiscal equity over time. For those looking to buy or sell properties, it is essential to monitor the IMI amount and the rate applied by the municipality, as these factors directly influence property maintenance costs. IMI is therefore an important factor in managing real estate assets, both for families and businesses. The IMI increase in 2025 reflects the economic conditions of recent years, marked by high inflation. The three-year revision of the taxable patrimonial value is a legally provided mechanism to ensure the tax keeps pace with the real estate market and the broader economy. Thus, IMI remains a fair and updated tax, though it may represent an additional burden for owners in a context of rising prices. While IMI can be seen as a cost, it guarantees the sustainability of local authorities and the maintenance of public services, contributing to the development of communities across the country.
Source: Adobe Stock Author: Redaction Paying a house deposit is one of the most important aspects to understand after learning the steps to buying a home, analysing the full list of costs involved, and understanding the timeline of the process. This step is key to ensuring the success of your property purchase, as it directly influences the amount of financing, the loan conditions, and your long-term financial stability. In this article, we explain in detail what paying a house deposit means, the usual amount required, and the advantages of preparing this stage in advance. What Paying a House Deposit with Financing Means Paying a house deposit means paying part of the property’s value upfront at the time of purchase, using your own funds, that is, your own money. The amount paid as a house deposit acts as a guarantee for the bank and demonstrates your saving capacity and financial commitment. This amount, also known as the initial deposit, is mandatory in the home-buying process and is not financed by the bank. It usually represents between 10% and 20% of the property price, depending on the mortgage conditions and the buyer’s profile. For example, if you pay a deposit on a house worth €200,000 and the bank finances 90%, you will need to pay €20,000 upfront (10% of the value). The higher the deposit amount you choose to pay, the lower the loan amount will be, which can translate into lower monthly repayments and less interest paid over time. Why Is the Deposit 10% to 20% of the Property’s Value? The amount needed for a house deposit with financing in Portugal is usually between 10% and 20% of the property value due to rules set by the Bank of Portugal and the banks’ risk management policies. For primary residences, the Bank of Portugal states that mortgage financing cannot exceed 90% of the property value, whether it’s the purchase price or the valuation amount (whichever is lower). This means that the buyer must ensure at least 10% of the property value with their own funds. For second homes or investment properties, the financing limit is even lower, usually up to 80%, meaning a minimum deposit of 20%. This deposit requirement exists to: Reduce the bank’s risk, ensuring the buyer has saving capacity and is committed to the loan. Protect the financial system by avoiding over-indebtedness and defaults. Ensure that, in case of property devaluation, the outstanding debt does not exceed the collateral value. Additionally, the deposit amount may exceed 10% if the bank’s valuation of the property is lower than the purchase price. In these cases, the buyer must cover a higher percentage of the price, as the bank will only finance up to the permitted limit on the lower of the two values. There are exceptions, such as some schemes for young people under 35 or bank-owned properties, where financing can go up to 100%, but these are specific cases with their own conditions. Advantages of Paying a Larger Initial Deposit Paying a house deposit higher than the minimum required offers several advantages: Reduced loan amount The larger the deposit, the smaller the loan granted by the bank, which means less debt to repay over time. Lower total loan cost With less money borrowed, the total interest paid over the life of the mortgage will be lower, saving money in the long term. Better loan conditions A larger deposit can improve your negotiating power with the bank, possibly leading to lower spreads (more favourable interest rates). Lower monthly repayments With a smaller loan, monthly repayments become more affordable, reducing the debt-to-income ratio and making the loan more sustainable within your budget. Faster mortgage repayment With less capital owed, you may be able to pay off the loan sooner, reducing the total repayment period and associated interest. Greater financial security A larger deposit means more of your own capital is invested in the property, which can protect against market devaluation and reduce the risk of owing more than the house is worth. However, when paying a house deposit, you should not use up all your available savings, always keeping a reserve for unexpected expenses and future costs. Paying a house deposit is a crucial step that not only facilitates mortgage approval but also contributes to better long-term financial conditions. Preparing for this stage with care and planning allows you to reduce your loan amount, decrease the interest paid, and ensure greater security in your property investment. Therefore, when moving forward with the purchase of your home, always remember the importance of paying a house deposit wisely and strategically, ensuring a smoother and more beneficial experience.
Source: Adobe Stock Author: Redaction What is IRC payment? IRC (Corporate Income Tax) payment is one of the main tax obligations for companies in Portugal. This tax is levied on the profits of corporations and other legal entities, playing a crucial role in financing public services and maintaining the State’s budget balance. The IRC payment process involves preparing and submitting Form 22, where income is declared and the tax due is calculated. Extension of the deadline for submitting Form 22 In 2025, the Government decided to extend the deadline for submitting Form 22 and consequently for paying IRC until 30 June. This decision was prompted by technical failures recorded on the Tax Authority Portal, caused by a blackout that affected the entire Iberian Peninsula. The difficulties encountered by certified accountants and companies in submitting declarations led to the need to adjust the fiscal calendar to ensure that all obligations can be met with the required quality and accuracy. Impact of technical failures on tax compliance The blackout and persistent failures on the Tax Authority Portal created significant constraints for companies and accounting professionals. Although more than 380,000 Form 22 declarations had been submitted by early June, this represented only about 60% of the declarations submitted the previous year. In this context, extending the deadline for IRC payment and for submitting the Simplified Business Information (IES) proved essential to avoid unfair penalties and to ensure all entities comply with their tax obligations. Procedures for paying IRC IRC payment must be made after submitting Form 22 through the Tax Authority Portal. Companies must calculate the tax due based on the profits earned in the previous fiscal year, taking into account applicable deductions and tax benefits. After submitting the declaration, a payment reference is generated, which must be paid within the established deadline. Failure to meet deadlines can result in fines and interest charges, so it is essential that companies closely monitor the fiscal calendar and any updates communicated by the authorities. Importance of meeting tax deadlines Timely compliance with tax obligations, such as paying IRC, is crucial to avoid penalties and ensure companies’ tax standing is regular. The extension of the deadline to 30 June offers an additional opportunity for companies to regularise their situation, especially amid technical and operational difficulties. It is advisable for companies to maintain close communication with their certified accountants to ensure all procedures are correctly completed within the stipulated deadlines. The role of certified accountants in the IRC payment process Certified accountants play a key role in the assessment and payment of IRC. They are responsible for preparing the necessary documentation, submitting Form 22, and overseeing the entire tax process. Recent technical difficulties have highlighted the importance of these professionals, who have been essential to ensuring tax obligations are met even in adverse situations. Consequences of non-payment of IRC Failing to pay IRC within the legal deadline can have serious consequences for companies, including fines, interest charges, and possible restrictions on access to public support. Moreover, failing to regularise tax status can damage a company’s reputation and credibility with clients, suppliers, and financial institutions. Therefore, it is crucial that companies are well informed about their obligations and strictly adhere to deadlines set by tax authorities. IRC payment is a central tax obligation for all companies in Portugal. The extension of the deadline for submitting Form 22 and paying the tax until 30 June 2025 is a necessary response to the technical difficulties experienced on the Tax Authority Portal, allowing companies to fulfil their obligations without unfair penalties. Staying informed about the fiscal calendar and relying on the support of certified accountants are essential steps to ensure tax compliance and business sustainability.
Source: Adobe Stock Author: Redaction The role of tax payments in financing Social Security Tax payments in Portugal are fundamental to guaranteeing the sustainability of the Social Security system, especially through the Social Security Financial Stabilisation Fund (FEFSS). This fund serves as a financial cushion designed to ensure pension payments in case of deficits in the social security system, a scenario increasingly relevant due to population ageing and declining birth rates. Since 2016, the amount transferred to the FEFSS through tax payments has more than doubled, reaching the threshold of 1.7 billion euros in 2024. These resources come from various tax sources, such as social VAT, the Additional IMI Tax (AIMI), Corporate Income Tax (IRC), and specific contributions from the banking sector, reflecting the importance of tax payments for the countrys financial stability. Main taxes funding the Stabilisation Fund Social VAT represents the largest share of revenues transferred to the FEFSS, with over one billion euros in 2024, followed by Corporate Income Tax, which contributes around 449 million euros. AIMI, popularly known as the house tax, has already yielded over one billion euros since its creation in 2017, also being an important source of funding for the fund. In addition, the additional contribution from the banking sector, created in 2020 to respond to the costs of the pandemic, has provided significant, although more modest, amounts to the fund. The diversification of these revenue sources through tax payments allows greater financial robustness to face possible crises in the pension system. Evolution and importance of tax payments for the social security system The tax payments feeding the FEFSS have grown consistently in recent years, following the evolution of the tax burden in Portugal. Although representing less than 1% of the total annual tax burden, the revenue allocated to the fund is essential to ensure the stability of the social security system, especially in an adverse demographic context. The fund was created in 1989 precisely to guarantee that, even in periods of deficit, pension payments would not be compromised. The increasing transfer of revenues from tax payments reflects recognition of the need to strengthen this financial cushion, ensuring social protection for current and future generations. The impact of tax payments on the budget balance Tax payments in Portugal not only finance the Social Security system but also contribute to the State’s budget balance. Tax revenue from VAT, IRS (personal income tax), IRC (corporate income tax), AIMI, and other taxes is essential to support public spending, including pensions, health, education, and infrastructure. The increase in transfers to the FEFSS in 2024, 65 million euros higher than in 2023, demonstrates the ongoing effort to balance public accounts and ensure the sustainability of the system. This financial reinforcement also allows facing the challenges arising from population ageing and increasing pressure on public finances. Future prospects of tax payments and social sustainability The 2025 State Budget forecasts an increase in revenues from tax payments allocated to the FEFSS, estimating a total of 1.8 billion euros. This forecast reflects the Government’s intention to continue strengthening Social Security financing, anticipating the demographic and economic challenges Portugal faces. The sustainability of the social security system thus depends on taxpayers’ strict fulfilment of their fiscal obligations and the State’s ability to efficiently manage the resources coming from tax payments. Maintaining and increasing these revenues are crucial to ensuring that pensions continue to be paid in a stable and fair manner. Tax payments in Portugal are much more than a fiscal obligation; they are an essential pillar for social protection and the country’s economic stability. Through the Social Security Financial Stabilisation Fund, tax revenues ensure that pensions are paid even in times of crisis, protecting thousands of Portuguese citizens. The growing transfer of taxes to this fund demonstrates the importance of a solid and sustainable fiscal policy that balances present needs with future security. Citizens’ commitment to tax payment is therefore a direct investment in the quality of life and wellbeing of the generations that today and tomorrow depend on Social Security.
Source: Adobe Stock Author: Redaction Exemption from IMT and Stamp Duty for young people: an essential incentive Since August 2024, the exemption from IMT (Municipal Property Transfer Tax) and Stamp Duty has been one of the Government’s main measures to support young Portuguese people in purchasing their first own and permanent home. This initiative aims to ease the tax burden associated with property acquisition, making the process more accessible for young people up to 35 years old, especially in a context where housing prices have been rising significantly. The IMT exemption for young people represents a concrete form of incentive for housing, promoting autonomy and financial stability among young people, while also stimulating the property market. It is a measure intended to respond to an urgent social need, facilitating access to homeownership and contributing to the retention of new generations within the national territory. Recent data confirm the success of the measure Data released by the Ministry of Finance show that, by the end of April 2025, more than 36,000 young people had benefited from the exemption of IMT and Stamp Duty, with 25,275 properties acquired under this scheme. The average value per property stands at €190,900, demonstrating that the measure has been effective in supporting the purchase of homes at affordable prices for the majority of young people. This figure represents a significant increase compared to data released in March, when there were 25,933 young beneficiaries and 18,213 properties acquired. The continuous growth in uptake of this exemption shows that the measure is fulfilling its purpose of facilitating access to housing for young Portuguese people. Conditions and limits of the IMT exemption for young people Full IMT exemption applies to properties whose value does not exceed the fourth tax bracket, set at €316,772. For properties valued up to €633,453, the exemption is partial, with the tax rate corresponding to the next bracket, which is 8%, being applied. This differentiation allows a wider range of young people to benefit from the measure, albeit with a gradual reduction in benefit depending on the property value. Besides the property value, it is essential that the young beneficiaries were not considered dependants for IRS (income tax) purposes in the year of purchase, reinforcing the social nature of the measure by directing the benefit to those who genuinely need support to acquire their first home. This condition helps prevent abuse and ensures that the IMT exemption fulfils its role as a social incentive. Metropolitan areas lead demand for properties with IMT exemption Most properties acquired under the IMT exemption are located in the Lisbon and Porto metropolitan areas. Municipalities such as Sintra, Vila Nova de Gaia and Seixal stand out as the most sought-after, reflecting the housing pressure these zones face. These locations combine a diverse residential offer with good accessibility and infrastructure, attracting many young people seeking their first home. This phenomenon reveals that the IMT exemption not only impacts property acquisition but also influences the dynamics of the real estate market in urban areas where demand is more intense. The measure contributes to the revitalisation of these municipalities and to the retention of young people, who are essential for the economic and social development of these regions. Facilitated financing with public guarantee for young buyers Alongside the IMT exemption, the Government has implemented a mechanism that allows young people up to 35 years old to finance the full value of the property through a public guarantee. According to data from the Bank of Portugal, in the first quarter of 2025, this mechanism accounted for 9% of the number of mortgage contracts and 13% of the total amount of new contracts. Banks that have joined the public guarantee protocol have used around 10% of the maximum available amount between January and March, although usage varies significantly between banks. Some institutions have used more than 30% of the allocated limit, while others have yet to reach 5%. This scenario demonstrates that despite the existence of the mechanism, its utilisation also depends on each bank’s strategy and offer. The average value of contracts with public guarantee is around €190,000, slightly higher than the €173,000 of contracts without this guarantee, indicating that the guarantee is enabling young people to access properties of higher value than would be possible without this support. Concrete benefits of the IMT exemption for young people The exemption from IMT and Stamp Duty translates into significant savings for young buyers, reducing the initial costs of acquiring a home. This reduction in fiscal charges facilitates access to credit and allows young people to allocate more resources to other housing-related expenses, such as renovations, furniture or insurance. This measure has a direct impact on young people’s financial capacity, promoting their autonomy and stability. Furthermore, it contributes to stimulating the property market by encouraging the purchase of homes for own occupation, which can have positive effects on the economy and urban regeneration. Final reflections on the IMT exemption and the future of youth housing The IMT exemption for young people up to 35 years has proven to be an effective policy to support access to homeownership in Portugal. The increase in the number of properties acquired and the growing use of credit with a public guarantee highlight the positive impact of this measure. However, despite the benefits, the property market continues to face challenges, such as rising prices and a shortage of supply in some regions. Therefore, the IMT exemption should be seen as part of a broader set of public policies necessary to ensure that young Portuguese people can access decent and adequate housing. The IMT exemption represents an important step to facilitate the purchase of the first home, promoting the social and economic inclusion of young people and contributing to the sustainable development of the property market in Portugal.
Source: Adobe Stock Author: Redaction Origin of the additional tax on banks The additional tax on banks, officially known as the Solidarity Surcharge on the Banking Sector (ASSB), was created in 2020, at the height of the crisis caused by the COVID-19 pandemic. Its aim was to strengthen Social Security funding at a time when the Portuguese State was facing unprecedented budgetary pressure due to increased social spending and falling tax revenues. Since its inception, the tax has been the subject of criticism and contestation by the banking sector, which has always questioned its fairness and constitutionality. Declaration of unconstitutionality In June 2025, the Constitutional Court (TC), meeting in plenary session, declared unconstitutional the rule that determined the collection of the tax for the first half of 2020. The ruling, dated 3 June, is based on the violation of the principle of the prohibition of retroactive taxation, enshrined in Article 103(3) of the Constitution of the Portuguese Republic. In other words, the tax was applied retroactively to a period prior to the entry into force of the law that created it, which is prohibited by the Constitution. According to the ruling, it is decided to declare the unconstitutionality, with general binding force, of the rule contained in Article 21(1)(a) of Law No. 27-A/2020 of 24 July, in the section referring to the calculation of the tax for the first half of 2020. 1(a) of Law No. 27-A/2020 of 24 July, in the section referring to the calculation of tax for the first half of 2020, for violation of the principle of prohibition of retroactive taxation. This decision comes after three other rulings by the Constitutional Court that had already considered the rule unconstitutional, but only in specific court cases, without general binding force. With the repetition of the judgments, the Public Prosecutors Office at the Constitutional Court was able to request a declaration of unconstitutionality with general effects, which has now happened. Consequences for the State and the Banking Sector In practice, this decision obliges the State to refund banks the amount unduly collected in the first half of 2020, estimated at around €16 million. According to constitutional law experts, the Tax Authority should automatically refund these amounts without the need for a request from the banking institutions, although the latter may still claim interest on arrears for the amount unduly retained. It should be noted that the unconstitutionality now declared does not apply to the tax itself, but only to its retroactive collection in the first half of 2020. The ASSB remains in force and, according to this years State Budget, is expected to generate around 40.8 million euros for the public coffers. Since its creation, this tax has generated approximately 180 million euros for the State, mainly for the Social Security Financial Stabilisation Fund. Implications for the Average User For the average citizen, the Constitutional Courts decision may seem distant, but it has significant implications. On the one hand, the refund of the tax to banks represents a loss of revenue for the State, which could have an impact on the financing capacity of Social Security or force adjustments to other taxes or public expenditure. On the other hand, maintaining the additional tax on banks may continue to be reflected in the costs of banking services, as banks tend to pass on part of the tax burden to their customers, either through commissions, fees or less favourable credit conditions. In addition, the discussion about the fairness and equity of this tax raises questions about the balance between the need for social solidarity and the competitiveness of the financial sector. The banking sector argues that it already bears a high tax burden, particularly through stamp duty and the inability to deduct VAT on many financial services, which ultimately also penalises business and private customers. On the other hand, the State justifies the additional tax on banking as a way of compensating for the VAT exemption from which the sector benefits and of ensuring a fair contribution to the financing of social policies in times of crisis. The declaration of unconstitutionality of the additional tax on banking for the first half of 2020 is a significant milestone in the relationship between the State, the financial sector and citizens. The decision reinforces the importance of respecting constitutional principles when creating new taxes and forces us to reflect on the balance between tax fairness, the sustainability of public finances and the impact on users of banking services. The evolution of this tax and future decisions on its application will continue to be closely monitored by all stakeholders in the Portuguese economic and social sector.
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