According to the proposed law presented by the Government to Parliament this Tuesday, December 2nd, "the rate is always 7.5% on the acquisition of an urban building or an autonomous fraction of an urban building intended for housing, with no exemption or reduction applying whenever the acquirer is a non-resident."

In other words, instead of applying the regular IMT (Municipal Property Transfer Tax) rates when a citizen buys a property intended exclusively for their own permanent residence, which range from 2% (purchases from €104,261) to 7.5% (from €1,128,287), the Government wants the rate for non-residents to be "always 7.5%".

Exceptions

Some exceptions are foreseen in this point. From the outset, foreign citizens who remain in the country for more than 183 days, consecutive or intermittent, in any 12-month period beginning or ending in the year in question are excluded. Also excluded are those who perform "functions or commissions of a public nature, in the service of the Portuguese State", according to Article 16 of the IRS Code.

Also excluded from this single IMT rate on the purchase of housing are "those who become resident for tax purposes in national territory (...) within two years from the date of acquisition", the government's bill also states.

The third exception applies if the property is "intended for residential rental with a monthly rent that does not exceed the limits [of moderate rent, i.e., 2,300 euros], within six months from the date of acquisition and is rented for at least 36 months, consecutive or intermittent, during the first five years after acquisition," it also reads.

Refunds

If the buyers prove that they became residents within two years of the date of acquisition of the house or place the house on the rental market under the conditions foreseen, "the Tax and Customs Authority will refund, at the request of the interested party, the amount corresponding to the difference between the tax paid and the amount that would result from the application of the foreseen rates."

It is important to remember that the amendments were submitted to Parliament in the form of legislative authorization and that, to enter into force, they need to be approved by the deputies.

The increase in IMT (Property Transfer Tax) for non-residents was already foreseen in September, when the government gave the green light to the guidelines of the Construir Portugal - Arrendamento e Simplificação (Build Portugal - Leasing and Simplification) program, a package that gave rise to two legislative initiatives approved by the Council of Ministers on Friday, November 28th.