Offshore Company Ownership of Portugal Real Estate

 

Here's the TLDR version - given the complex web of anti avoidance provisions in Portugal's tax code, one cannot LEGALLY avoid capital gains taxes by using an offshore entity whose sole purpose is holding Portugal situs real estate.  It may however, be possible to avoid stamp duty and it may be possible to avoid the purchase tax.  Therefore a real estate agent should advise clients to just hold the real estate in a Portugal company rather than an offshore SPV or special purpose (offshore) vehicle for holding the real estate.

 

That's the short quick version.  Now having said that, the offshore entity can work to legally avoid the Portugal taxes but it's structure would much more complicated that using a quick, cheap and easy offshore company in a whitelisted jurisdiction.  As always - get ADVICE from a tax team qualified to give it.

 

 

Jurisdictions


Histrocially, popular structures include Malta or the USA (especially Delaware).  Other popular jurisdictions included the UK and New Zealand. Countries beyond of Portugal (“offshore centres”) where the corporation is domiciled are either classed as Black or White list Jurisdictions.   When dealing with Portugal, once should always choose a white listed jurisdiction. I talk more about this issue here - https://htj.tax/2020/11/nhr-non-habitual-tax-status-in-portugal/

Black listed jurisdictions are often taxed punitively

 

 

Corporate ownership of property 

 

Below is a chart, which shows some of the Costs involved for a Non-resident of Portugal.   It is extremely difficult, but possible, to avoid certain taxes as showed below.

 

 

 

If you think that the annual property tax or IMI seems expensive, consider how much it could be in the US -

Rhode Island. Average effective property tax: 1.53% ...
Ohio. Average effective property tax: 1.62% ...
Nebraska. Average effective property tax: 1.65% ...
Texas. Average effective property tax: 1.69% ...
Connecticut. Average effective property tax: 1.70%

 

Let us know if you need help.

 

 

 

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