Inheritance tax (IHT) and gift tax on property in Portugal

Not under that name. Since 2004, property received for free, by gift or inheritance, pays stamp duty (imposto do selo) at 10% of its tax value. A spouse or unmarried partner, children, grandchildren, parents and grandparents are exempt from the 10%, so most family inheritances pay nothing.

Siblings, nephews and nieces, uncles and aunts, stepchildren and friends pay 10% on the VPT of the share they receive. The rate is flat, with no bands and no tax-free allowance on property.

Yes. Portuguese stamp duty applies to property located in Portugal, whatever the nationality or residence of the owner and of the person receiving it. The same family exemptions apply.

Your home country may also tax the estate or the gift under its own rules, for example UK inheritance tax. Check there too: a tax paid in Portugal is not automatically credited elsewhere.

This is separate from the tax. Under the EU Succession Regulation (650/2012), the law of the country where the deceased was habitually resident applies by default, but anyone can choose the law of their nationality in a will. Portuguese law reserves part of the estate for the spouse, children and, without children, parents (forced heirship, or legítima).

If you own property in Portugal, a lawyer can tell you whether a Portuguese will, or a choice of law in your existing will, makes things easier for your heirs.

Parents give the home to their children but keep a life interest (usufruct): they go on living in it, or receiving the rent, for life. The children get the bare ownership, and the tax is worked out on its value: the VPT less the value of the life interest, which depends on the donor's age.

With a donor aged 70, the life interest is worth 25% and the tax falls on 75% of the VPT. When the life interest ends, the Tax Authority can charge tax on the difference between the VPT at that time and the value already taxed.

The person receiving the home pays. The gift or the death must be reported to the Tax Authority on the Stamp Duty Modelo 1 form by the end of the third month after it: for a gift, by the person receiving it; for an inheritance, by the head of the estate (cabeça de casal), with a list of all the assets. The form is required even when the transfer is exempt. The Tax Authority then works out the tax and sends the bill.

Heirs who live abroad need a Portuguese tax number (NIF) to be registered as owners and to pay the tax.

On the tax value (Valor Patrimonial Tributário, VPT) shown on the property record (caderneta predial) on the date of the gift or the death, not on the market value. With several heirs, each pays on their own share: a child and a nephew who inherit half each pay €0 and 10% of half the VPT respectively.

For capital gains tax, the acquisition value of a home received by gift or inheritance is the value used for stamp duty, usually the VPT. As the VPT is usually lower than the sale price, the taxable gain can be large. See capital gains tax on selling property.

For a gift, the deed (at a notary or a Casa Pronta desk) and the land registration. For an inheritance, the declaration of heirs (habilitação de herdeiros), the division of the estate and the registration, which can all be handled at a Balcão das Heranças desk. Afterwards, the new owner pays the annual IMI property tax.