Receiving an inheritance always raises questions about taxes. Contrary to what many believe, Portugal does not have a classic inheritance tax, but there are tax obligations to fulfil. See how it works.
There is no inheritance tax, but there is Stamp Duty (Imposto do Selo)
Portugal abolished the tax on successions and donations, but maintains Stamp Duty (Imposto do Selo) on gratuitous transfers. It is this tax that can apply to inheritances and donations.
Exemption for close relatives
An inheritance transfer to a spouse or de facto partner, descendants (children, grandchildren) and ascendants (parents, grandparents) is exempt from Stamp Duty (Imposto do Selo). This means that for most inheritances between direct relatives, no tax is payable on the inherited assets.
When tax is payable
Stamp Duty (Imposto do Selo) on gratuitous transfers applies, at a rate of 10 per cent, when the beneficiaries are not direct relatives, for example, siblings, nephews or third parties. For real estate, an additional component may apply.
The division process
Division (partilha) is the process of dividing assets among heirs. It can be done by public deed, by authenticated private document or, in case of disagreement, through judicial means. It involves reporting to the Tax Authority (Autoridade Tributária) and adhering to deadlines.
Real estate in the inheritance
When there is real estate, it is necessary to register it in the name of the heirs and manage future Municipal Property Tax (IMI). The subsequent sale of inherited property may generate capital gains, calculated from the value considered at the time of transfer.
Deadlines to meet
Reporting the inheritance to the Tax Authority (Autoridade Tributária) has a legal deadline. Non-compliance can result in fines, so it is advisable to deal with the matter in good time, even when no tax is payable.
At Grupo Your, we support families with the tax framework of inheritances and divisions and with fulfilling obligations. Speak to us to handle the process securely.
