New TAX Rules for Non-Residents: Flat 7.5% Property Transfer Tax Proposed

The Portuguese Government has introduced a proposal to apply a flat IMT rate of 7.5% on all residential property purchases made by non-residents. This represents a major change from the current progressive IMT system, where tax rates range between 2% and 7.5% depending on the property value.

The aim of the measure is to standardize taxation for foreign buyers, but the proposal also includes several key exceptions:

• Foreign citizens who spend over 183 days per year in Portugal will be considered residents and therefore avoid the flat rate.
• Individuals carrying out official public duties on behalf of Portugal are exempt.
• Buyers who become tax residents within two years of purchasing the property will not be subject to the 7.5% rate.
• Properties placed on the long-term rental market within six months—at rents within the “moderate rent” limit (up to €2,300/month) and kept rented for at least 36 months within five years—may also apply the normal IMT scale.

If buyers later fulfill one of these qualifying conditions, the Tax Authority will refund the difference between the flat rate paid and what they would have owed under the standard brackets.

These changes form part of the Government’s wider “Construir Portugal” housing package and must still be approved by Parliament before entering into force