Buying A Property in Portugal
Purchasing a property in Portugal is a straightforward and well-regulated process. With the right guidance, transactions are often completed within two to six weeks. Here’s what you need to know.
The Buying Process
01
Letters of Intent
Once the property is chosen and terms are agreed, your agent drafts Letters of Intent. These documents summarise the agreed conditions for both buyer and seller. They are not legally binding but provide a framework for the lawyers representing each party.
02
Due Diligence
The buyer’s local lawyer carries out checks on the property. This includes verifying that documents are in order, the property is free of debts or liens, and that it is legally fit for sale.
03
Promissory Contract (Contrato Promessa de Compra e Venda)
This is the first binding stage of the transaction.
A deposit of around 10% is paid by the buyer, usually via their lawyer.
If the vendor withdraws, they must return double the deposit.
If the buyer withdraws, the deposit is forfeited.
04
Final Deed (Escritura)
The Final Deed is signed at the notary’s office. At this stage:
The buyer pays the remaining balance and applicable taxes.
Ownership is registered in the Land Registry.
Utilities are transferred into the buyer’s name.
If either party cannot attend, power of attorney can be granted to a lawyer.
Buying Property Through a Corporate Structure
Some properties in Portugal are held by a corporate structure. In these cases, the process differs slightly.
01
Letters of Intent
Outlines the agreed conditions, as with a standard process.
02
Due Diligence
The buyer’s local lawyer not only reviews the property but also the company that owns it. This includes corporate liabilities, fees, and legal history.
03
Share Purchase Agreement (SPA)
A Share Purchase Agreement is prepared, setting out the terms of the sale. Both parties sign, and the buyer usually pays a 10% deposit.
04
Completion
The buyer pays the balance, and the seller transfers ownership of the shares. This process is often carried out in English.
Costs to Consider
01
Legal Fees
Around 1–2% of the purchase price, depending on complexity.
02
IMT (Property Transfer Tax)
6%: Residential Urban Properties selling between €621,501 and €1,128,287
7.5%: Properties above €1,128,287
5%: Construction plots and non-residential urban properties
5%: Rural land
10%: Properties acquired by offshore entities in blacklisted jurisdictions
03
Stamp Duty
Stamp duty and IMT are not applied to purchases via a corporate structure.
04
Notary & Registration Fees
Approx. €2,000–€6,000 depending on the purchase price and complexity of the transaction.
Corporate Purchases
In most cases IMT is not applied to share transfers for non-resident companies. Resident companies depend on the share purchase structure
Again in most cases stamp duty is not applied to non-resident companies.
- Company management costs typically €2,000 per year.
Disclosure if you or your family members are politically exposed (PEPs)
Understanding KYC (Know Your Customer)
KYC procedures are mandatory in Portugal to prevent fraud and money laundering. Buyers should expect to provide:
Buyers should expect to provide:
- Proof of identity and source of funds
Disclosure if you or your family members are politically exposed persons (PEPs)
Full cooperation with banks, lawyers, and agents to complete required forms
Tips for Buyers
01
Work with a Good Lawyer
Ensure compliance and smooth due diligence by partnering with an experienced Portuguese property lawyer.
02
Be Transparent
Keep documents updated and accessible to avoid delays in the purchase process.
03
Plan for Taxes and Fees
Have a full picture of costs beyond the purchase price to budget appropriately.
04
Expect KYC Checks
Detailed financial information is standard and routine. Prepare documentation in advance.