Office Dr. Rathenau & Colleagues: Portuguese Property Law 2016

Donation

With regard to inheritance law and tax law it can be more favourable to donate a property than to bequeath it.

The Portuguese state taxes gifts with a stamp duty of 10 % of the value of the gift. Donations between spouses, descendants and ascendants are tax-free. Special gift taxes and inheritance taxes do not exist. Since 2009 the tax exemption also applies for cohabitants living together for more than two years, regardless of the sex (homosexually or heterosexually orientated). Be aware that the donations need to be notified.

The donee should hold the property for at least two years; otherwise he has to pay capital gain tax.

There is no guarantee that the tax law remain like this. The Portuguese tax law is being modified constantly. Therefore do not hesitate too long.

Here are some main advantages of a donation in comparison to an inheritance.

  • The tax law may change. A donation can avoid the possible negative impact of a future tax law.

  • The descendants do not have to carry out expensive and bureaucratic inheritance proceedings.

  • A donation ensures legal certainty. It can forestall future claims.

  • Depending of the nationality, there can be a double taxation on the inheritance, for example for Germans with a property in Portugal.

  • Under Portuguese law the donor can reserve a right of residence. Therefore it is possible to donate the property, but to still continue living in it.