SUCCESSION IN PORTUGAL AND DONATION

Since television reports on the benefits of the RNH. Foreign real estate investment in Portugal continues to grow. But investing in Portugal also raises questions about gifts and inheritance. 

The Donation in Portugal

The donation is a type of contract in which the donor gives away his property free of charge. This process is immediate and cannot be changed. It can be for real estate investments in Portugal as well as for other assets. 

There is also the manual donation, passing directly from one person to another; indirect gifting through a bank transaction; and, finally, gifting by notarial deed. 

A donation by notarial deed involves fees that are calculated based on the region and the specific circumstances. The best advice is to contact a Portuguese legal expert, who can provide you with detailed information. 

In particular, an agreement was signed between France and Portugal in 1994 in Lisbon regarding Portuguese taxes. The law applies to gifts and inheritances from deceased individuals. The measures taken concern public-law institutions operating in the scientific, artistic, and educational sectors, among others. 

Even though making a donation may seem free, a donation in Portugal is subject to stamp duty (tax). Under current law, donations of real estate are subject to rates of 0.8 % and 10 %, which correspond to a total tax payable equal to 10.8 % of the value of the transferred real estate. For other types of property, such as cash, the applicable rate is 10 %. 

However, it is important to note that in Portugal, stamp duty does not apply to gifts of less than €500.00 or to gifts made to a spouse, ascendant, or descendant. 

The Estate in Portugal

With regard to inheritance in Portugal, the real estate, as well as monetary assets (held in your bank accounts), are exempt from inheritance tax for direct descendants. However, they must be reported to the Portuguese tax authorities.

Pursuant to EU Regulation No. 650/2012, dated August 17, concerning succession and the creation of a European Certificate of Succession (the «Rules and Regulations»), which applies to the estates of persons who died on or after August 17, 2015, any person who wishes to establish domicile and reside in Portugal, regardless of nationality, may choose Portuguese law as the law applicable to their estate, to the exclusion of the law of their nationality.