Corporate ownership of real estate in Portugal
Besides the process described in BUYING PROCESS some properties are held within companies.
Generally, these can be a Portuguese company (Portuguese LDA), a limited company, but also a UK LTD Limited company, or ‘offshore’ company (generally registered in Malta or Delaware).
Company owned properties can exists for various reasons, such as for multiple (family) members to collectively own a property, for inheritance tax planning, and other fiscal reasons.
With this type of transactions you are able to purchase the shares owning the company and thus becoming owner of the property. With many high end villas, this is still a common way of owning real estate at the purchase tax, IMT is not applicable. Saving 7,5% IMT on properties above euro 1M (2020 tax rate) is a significant saving. In return, please be reminded that companies have yearly running costs somewhere in the euro 2000-3000 per year, for fiscal representation and management of the company. There might be further cost depending on the structure of the company, and jurisdiction.
Most villas owned within companies have ‘stand alone’ dormant companies with no commercial activities and are merely created for the purpose of owning real estate in Portugal.
When buying company owned properties in Portugal, your lawyer will do due diligence on the company, fiscal and other legal searches to ensure the company is ‘clean’.
Once approved, a SPA (Share Purchase Agreement) can be drawn up and reservation deposit paid. This step would be similar the CPCV (promissory contract) done within the traditional way of buying a property.
At a date suitable for both parties the final share transfer can be completed, with the payment of the remainder of the total purchase price.
Corporate ownership of properties in Portugal might or not, suit your personal (tax) situation. We recommend to always seek fiscal and legal advice before considering to place an offer in a company owned property.
Since 2018, capital gains made on shares have become a taxable event. Non-resident companies are taxable and any gains need to be reported to the Portuguese tax authorities. In addition, different company jurisdictions might have other applicable rules, so we strongly recommend you seek legal advice.
Exclusive Algarve Villas recommends always using a local licensed lawyer when buying or selling real estate in Portugal.