Capital Gains Tax in Portugal

Capital gains tax in Portugal applies to the disposal of assets — property, shares, funds, bonds, intellectual property, and other capital assets. The tax treatment depends on the asset category and your residency status. Property gains (mais-valias imobiliárias).

Under Article 43 CIRS, gains from selling Portuguese real estate are taxed at progressive rates, but only 50% of the gain is included in your taxable income for resident taxation. This 50% inclusion rule is the single most important relief available to property sellers in Portugal.

If you sell a property for a €200,000 gain, only €100,000 is added to your taxable income. At a marginal rate of 45%, the effective tax rate on the full gain is approximately 22.5%. The 50% exclusion applies to properties held for any duration — there is no minimum holding period for the exclusion itself.

However, the reinvestment exemption (discussed below) requires the property to be your permanent residence. Securities gains (mais-valias mobiliárias). Gains from selling shares, bonds, ETFs, and investment fund units are taxed at a flat 28% rate (tributação autónoma) or included in your general income at progressive rates. You choose whichever is lower.

For taxpayers in the 12.5%–28% brackets, progressive rates may save money. For those above 28%, the flat rate is better. Short-term vs long-term: Portugal does not apply a preferential rate for long-term holdings of publicly traded securities.

A share held for one month and a share held for 10 years face the same 28% rate (or progressive rate if elected). Foreign capital gains. Gains from selling assets held outside Portugal — foreign property, foreign shares, international fund units — are taxable in Portugal for tax residents. Treaty provisions determine whether the source country also taxes the gain.

For real property abroad, both countries typically tax the gain. For foreign securities, the gain is generally taxable only in Portugal. Report all foreign gains on Anexo J.

Who qualifies. You may need to have used the sold property as your primary and permanent home. The property may need to be located in Portugal, the EU, or the EEA. The new property may need to also become your primary and permanent home. Reinvestment window.

You may need to reinvest the sale proceeds within 36 months after the sale, or you may have purchased the replacement property up to 24 months before the sale. The reinvestment can be in a new purchase, construction, or renovation of a permanent home in Portugal, the EU, or the EEA. Full vs partial exemption.

If you reinvest 100% of the net sale proceeds, the capital gain is potentially exempt. If you reinvest a portion, the exemption is proportional. If you sell for €500,000 (purchase price €300,000, gain €200,000) and reinvest €400,000 of the €500,000 proceeds, 80% of the gain is exempt.

You are taxed on 20% of the gain (€40,000), with the 50% exclusion applying to that amount. Common traps. The reinvestment may need to be in a property you actually live in — buying a rental property does not qualify. The property may need to be declared as your fiscal domicile within the required period.

If you leave Portugal within the reinvestment window, the exemption may be challenged. If Finanças (the Portuguese tax authority) determines that the new property was not your permanent home, the full gain becomes taxable retroactively. Over-55s and retirees.

A specific exemption applies to individuals over 55 (or retired) who sell their primary residence and reinvest in a qualifying life insurance contract, pension fund, or retirement savings product. The reinvestment may need to occur within 6 months. This provision captures retirees who downsize and do not purchase a replacement property.

The taxable gain on Portuguese property is not simply the sale price minus the purchase price. Several adjustments reduce the gain. Deductible costs on acquisition. IMT (Imposto Municipal sobre Transmissões — property transfer tax) paid on purchase, notary fees, registration fees, and real estate agent commissions paid on purchase are added to your acquisition cost. Deductible costs on disposal.

Real estate agent commissions, energy certificate costs, and legal fees paid on sale reduce the sale proceeds. Improvement costs. Documented expenses on property improvements (works that increase the property's value or extend its lifespan) incurred in the 12 years preceding the sale are deductible. Maintenance costs (painting, minor repairs) do not qualify. Keep invoices — Finanças requires documentation.

Inflation adjustment (coeficiente de desvalorização da moeda). For properties held more than 2 years, the acquisition cost is adjusted for inflation using annually published coefficients. This reduces the taxable gain, particularly for properties held over long periods. A property purchased in 2010 receives a coefficient that increases the acquisition cost by the cumulative inflation since 2010. Non-resident sellers.

Non-residents selling Portuguese property face a flat 28% rate on the capital gain. The 50% exclusion is available to non-residents who are EU/EEA nationals (following ECJ rulings). The reinvestment exemption is also available if the replacement property is in the EU/EEA and becomes the seller's permanent home. Non-EU/EEA non-residents pay 28% on the full gain.

Portuguese and foreign shares. Gains are taxed at 28% flat or progressive rates (your choice). No 50% exclusion applies to securities. No inflation adjustment. No reinvestment exemption. The taxable gain is the difference between the sale price and the acquisition cost, minus transaction costs (brokerage fees). Investment funds. Gains from redeeming units in Portuguese investment funds are taxed at 28%.

Foreign fund gains follow the same rate but are declared on Anexo J. EU UCITS funds are not treated preferentially in Portugal. Bonds and fixed income. Gains from selling bonds before maturity are taxed at 28%. Interest received (coupon payments) is taxed separately as investment income. Offsetting losses.

Capital losses on securities can be offset against capital gains of the same category within the same tax year. If you sell shares at a €10,000 loss and other shares at a €15,000 gain, you are taxed on the net €5,000 gain. Losses can be carried forward for 5 years.

Property losses typically may not be offset against securities gains (and vice versa). Losses on assets held in countries without a Portuguese tax treaty may not be deductible. NHR and IFICI holders. Under NHR, foreign capital gains on securities were exempt from Portuguese tax if the gains were "taxable" in the source country under the treaty.

IFICI does not replicate this exemption. Under IFICI, foreign capital gains are taxed at the standard 28% rate (or progressive) with treaty credits. The regime you hold fundamentally changes the capital gains outcome. For details, see IFICI and capital gains treatment.

Expats selling assets held abroad face a layered analysis. Portugal taxes the gain. The source country may also tax it. The treaty determines the credit. Foreign property. Most treaties allow both countries to tax real property gains. Portugal taxes the gain at progressive rates (with the 50% exclusion if the property was your permanent home and you reinvest).

The source country taxes under its domestic rules. Portugal grants a credit for source-country tax paid. Foreign securities. Most treaties allocate securities gains exclusively to the country of residence (Portugal). The source country does not tax the gain. This means no credit is needed — but you may need to still report the gain on Anexo J. Departure tax complications.

Canadians, Germans, and South Africans may have paid exit tax on unrealised gains when leaving their home country. When the asset is subsequently sold while living in Portugal, the Portuguese gain is calculated from the exit-tax base cost — not the original purchase price. This prevents double taxation on the same appreciation.

Coordinate with your home-country advisor to confirm the correct base cost. Timing of realisation. Portuguese tax is assessed on the calendar year in which the gain is realised. If you sell a UK property in December 2025, the gain is declared on your 2025 Portuguese IRS return (filed April–June 2026).

Currency conversion uses the ECB exchange rate on the date of sale. For a complete analysis of how foreign income and gains interact with your Portuguese return, see how Portugal taxes foreign income. For filing mechanics, see filing your Portugal IRS return.

Taxbordr analyses every capital gain — Portuguese and foreign — in the Position Memo, a founder-signed written document prepared by Telmo Ramos (Ordem dos Economistas Cédula No. 16379). The memo maps each disposal to the correct treaty provision, calculates the credit, and confirms the effective rate.

A practical comparison helps avoid category confusion: Property gains for residents often follow inclusion mechanics different from securities taxation. Securities gains often run on autonomous-rate logic unless aggregation is chosen. Cross-border assets require treaty analysis on top of domestic rules. For mixed portfolios, compute each disposal in its own category workpaper, then consolidate at return level. This prevents accidental misapplication of property rules to investment portfolios.