Published on and written by Cyril Jarnias
In recent years, Portugal has become a top destination for foreign real estate investors, drawn by its pleasant climate, quality of life, and economic opportunities. However, before diving into buying a property in Portugal, it is crucial to fully understand the legal and tax framework governing the local real estate market. Here is an overview of the key rules to know for investing confidently in Portuguese real estate.
Portugal, a Country Open to Foreign Investors
Good news for international investors: Portugal imposes no restrictions on property purchases by foreigners. Whether you are a European Union citizen or from a third country, you can freely buy an apartment, house, or land on Portuguese territory. This openness of the real estate market to foreign capital has greatly contributed to the sector’s dynamism in recent years.
However, a few specifics should be noted:
The purchase process is broadly similar to that in France, involving the signing of a purchase agreement followed by a deed of sale before a notary. It is highly recommended to hire a local lawyer to secure the transaction and verify the property’s compliance.
Good to know:
The Golden Visa program, which allowed obtaining a residence permit through real estate investment, was abolished in 2024. However, other investment options remain eligible for this program.
The Legal Framework of Portuguese Real Estate: What You Need to Know
The Portuguese real estate market is governed by a set of laws and regulations aimed at protecting the rights of buyers and sellers. Here are the main texts to be aware of:
The Portuguese Civil Code: It defines general rules on property, contracts, and obligations.
The Urban Planning Law (Lei dos Solos): It governs land use planning and construction.
The Legal Regime for Real Estate Intermediation: It regulates the activity of real estate agents.
The Rental Law (Novo Regime do Arrendamento Urbano): It defines the rights and obligations of landlords and tenants.
Key points to remember include:
Real estate contracts must be written in Portuguese, even if a translation can be provided. It is therefore essential to work with professionals who are fluent in the language and local law.
Good to know:
Portugal has implemented a digital land registry system (eBUPi) that facilitates the identification and delimitation of properties, especially in rural areas.
Real Estate Taxation in Portugal: An Attractive but Evolving Regime
The Portuguese tax regime has long been considered very favorable for foreign investors. While some advantages remain, recent changes have somewhat altered the landscape.
The main taxes related to real estate in Portugal are:
For non-residents, the tax regime has evolved in recent years:
Rental income is now taxed at a flat rate of 28% for non-residents, with the option to choose the progressive income tax scale.
Good to know:
Portugal has implemented a specific tax regime for crypto-assets, with a 28% tax rate on capital gains from selling real estate in exchange for cryptocurrencies.
Rights and Obligations of Property Owners in Portugal
Property owners in Portugal benefit from a protective legal framework but must also comply with certain obligations.
Key rights include:
Owner obligations include:
It is important to note that residential leases in Portugal are generally concluded for a minimum term of 5 years, with significant protections for tenants. Owners should therefore carefully evaluate their rental strategy before committing.
Good to know:
Portugal has established rent regulation zones (Zonas de Pressão Urbanística) in cities like Lisbon and Porto, where rent increases are controlled.
Recent Regulatory Changes: Toward a More Regulated Market
The Portuguese real estate market has undergone several regulatory changes in recent years, aimed particularly at curbing price increases and promoting housing access for local residents.
Recent measures include:
These developments reflect a desire by Portuguese authorities to better regulate the real estate market while maintaining its attractiveness for foreign investors. It is therefore crucial to stay informed about ongoing and upcoming legislative changes before any investment.
The Portuguese government has also announced plans to simplify administrative procedures related to real estate and further digitize services, which should make processes easier for foreign investors in the future.
Good to know:
Portugal launched a new tax incentive program in 2024 to attract skilled workers and entrepreneurs, the IFICI (Incentivo Fiscal à Investigação, Criatividade e Inovação), which could positively impact the real estate market in certain regions.
In conclusion, the Portuguese real estate market remains attractive for foreign investors, despite an evolving regulatory framework. Understanding local laws and regulations is essential for a successful investment and to fully capitalize on the opportunities offered by this dynamic market. Do not hesitate to work with local professionals to guide you through the process and secure your investment in Portugal.
Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
