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January 2011
Portugal Value Added Tax
- In most cases, VAT in Portugal is 23%.
- There is a reduced rate of 13% that applies, in the main, to restaurant services etc. There is a further reduced rate of 6% that relates mainly to basic food products.
- The VAT rates for the Azores and Madeira are lower (16%, 9% and 4%).
- VAT is payable on assets and services in Portugal as well as on imports into Portugal.
- Exports from Portugal are exempt from VAT.
- Income from medications and medical services as well as income from insurance and banking services are exempt from VAT.
- Reports to the VAT authorities are made monthly but if the annual income is below Euro 650,000 the report is made every three months.
- When the annual turnover is less than Euro 9,976, income is exempt from VAT; on the other hand, Vat may not be offset against expenses.
Portugal Real Estate Transfer Tax
- A real estate transfer tax is payable in Portugal on the transfer of real estate.
- There is an exemption up to a limit if the transfer concerns residential real estate.
- The basic rate of tax on urban real estate is 6.5%. Non-urban real estate transfers are taxable at 5%.
- When the buyer lives in a low tax jurisdiction the tax rate is 8%.
Portugal Inheritance and Gifts Tax
- Portugal Inheritance and gift tax was abolished on 1.1.2004, when relating to close relatives, parents, spouses and children. This can apply to houses, cars and even custom t-shirts.
- The tax for non close inheritors was replaced by 10% stamp duty.
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