SISA – Municipal Property Tax
The transfer for value of the right of ownership of real property, or of other equivalent rights, is subject to the municipal tax SISA, as provided for in article 94(1) of the CTA. Article 102 of the CTA establishes that the rate of the SISA is 2% (two per cent) and is charged on the value declared for the purposes of the sale and purchase or on the official taxable value of the property, whichever is the higher.
SISA is payable by the person who acquires the right of ownership of the property and must be paid prior to the signing of the deed of sale and purchase or other act equivalent to it or leading to an eventual sale and purchase transaction.
VAT
Sale and purchase transactions in respect of real property are exempt from VAT, under article 9(12)(d) of the VAT Code.
Stamp Duty
Stamp duty is payable on the execution of contracts to transfer the right of ownership of real property and the rate applicable is 0.2% (zero point two per cent) on the value of the transaction, under item 3.1 of the Stamp Duty Table annexed to the Stamp Duty Code (“CIS”). Stamp duty is payable by the person acquiring the right of ownership, under article 2(3)(b) of the CIS.
Taxation of Income – IRPC/ Corporate Income Tax
The taxation of capital gains made by a commercial company that transfers the right of ownership of a property (seller), and which is subject to IRPC, is done by determining the taxable profit of the company in question under article 17(1) of the IRPC Code. This article provides that:
“The profit is the mathematical sum of the net results for the financial year and any positive and negative changes in asset value occurring in the same period and not reflected in those results, determined on the basis of the accounting and any corrections made (for tax purposes) under the terms of the law”. The general rate of IRPC is currently 32% (thirty-two per cent).
Registration of the Sale and Purchase Contract
Contracts for the sale and purchase of real property are subject to registration at the Land Registry (Conservatória do Registo Predial), and this registration serves as proof of ownership of the property in question.