Capital Gains Tax Portugal: How Does It Work?

What is Capital Gains Tax (CGT)?

Capital Gains Tax is a tax that you are liable to pay when you make a profit from the sale of a Portuguese property or another capital asset. Personal belongings aren’t taxed, and inheritances are subject to a small Stamp Duty.

The 28 percent flat rate is the default for capital gains from shares and other securities. However, it does not apply to other assets, such as real estate. Gains on real estate are taxed at progressive rates, from 12.50 percent to 48 percent.

How much tax you owe depends on your residency status, how you own the asset, and whether the asset, or property, is your primary residence.

CGT in Portugal from real estate and investments is viewed as personal income. Therefore, they are subject to Portuguese IRS (Imposto sobre o Rendimento das Pessoas Singulares). You can learn more about the progressive IRS tax rates in our ultimate guide to taxes in Portugal.

When does Capital Gains Tax apply in Portugal?

Capital Gains Tax (CGT) is triggered in Portugal at the moment you make a profit from the sale or transfer of a qualifying asset acquired after 1988. The tax is calculated and paid in the subsequent tax filing period.

Here are a couple of factors that determine when you are liable for the tax:

• Trigger event: You trigger a CGT event the moment you sell or dispose of part, or all, of a capital asset (such as property, stocks, bonds, or investment funds). If you sell an asset at a loss, you can use it to offset other capital gains.
• Asset acquisition date: CGT only applies to the sale of assets (particularly real estate) that were acquired on or after 1 January 1989. Any real estate or investments purchased before 1 January 1989 are exempt from Portuguese CGT.
• Reporting obligation: The Portuguese tax year runs from 1 January to 31 December. You report the CGT event in the year you sold the asset. You must report your capital gains on your annual Personal Income Tax (IRS) return, which is typically filed between April and June of the following year.

Reporting CGT in Portugal is done through an IRS return known as Modelo 3, specifically using Annex G (or G1 in some instances). You will use the Portal das Finanças to fulfill most of your tax obligations, such as paying taxes, downloading documents, and submitting formal tax queries.

What assets are subject to Capital Gains Tax in Portugal?

Capital Gains Tax in Portugal (CGT Portugal) applies to profits you make from selling or transferring specific types of assets.

These include:

• Residential property (such as main homes, secondary homes, or rental properties)
• Commercial property (such as selling commercial real estate or land)
• Stocks and shares (such as gains from stock options and selling shares in certain companies)
• Corporate and government bonds
• Mutual funds and investment funds
• Derivatives and other complex financial instruments
• Cryptocurrency

If you want to learn more about how crypto taxes work, check our guide on Portugal for crypto traders.

What’s new from 2023 to 2025?

Since 1 January 2023, non-residents who sell property in Portugal follow the same tax rules as residents: only 50 percent of the profit is taxable, and the rate depends on your total global income.

In 2025, Portugal’s income tax brackets range from approximately 12.50 percent to 48 percent, and your real estate gains are taxed within these brackets after being combined with your other earnings.

In 2024, there were changes to the Personal Income Tax. Under the new PIT Code, gains or losses from selling traded securities or units in investment funds can qualify for partial tax relief.

According to PWC Portugal:

• You can exclude 10 percent of the gain if you held the asset for more than two years but less than five.
• You can exclude 20 percent of the gain if you held it for at least five years but under eight.
• You can exclude 30 percent of the gain if you kept the asset for eight years or longer.

Since 2023, capital gains from crypto assets have been taxed at 28 percent for short-term gains (those held for less than 365 days), while long-term gains are often exempt.

The Non-Habitual Resident (NHR) tax regime provided significant relief on capital gains for those who qualified. But that has changed since the regime ended in January 2024 and was replaced by the NHR 2.0.

Note: Properties bought before 1 January 1989 are still exempt from Capital Gains Tax.

How to calculate Capital Gains Tax (CGT) for Portuguese residents?

The Portugal capital gains tax for residents is calculated based on the type of asset you sell. You determine the net gain, apply a reduction, and calculate the final tax.

Here is a step-by-step guide for calculating CGT for Portuguese residents.

Step 1: Calculate the net capital gain

You can use the following formula:

Net Gain = Selling Price – (Adjusted Acquisition Value + Deductible Costs)

Step 2: Apply the taxable reduction

Portugal offers significant relief for real estate sales, which you can calculate based on this formula:

Taxable Gain = Net Gain x 50 percent

Only 50 percent is subject to tax; the other half is exempt.

Step 3: Calculate the final tax due

The 50 percent taxable portion is part of your annual personal income, such as salary, pension, or rental income.

The total amount is then taxed according to the progressive Personal Income Tax (IRS) rates in Portugal, which vary from 12.5 percent to 48 percent. Individuals with the highest income also pay a solidarity surcharge.

Your CGT liability is determined by the marginal IRS rate applicable to your total aggregated income.

Main home exemptions for Portuguese residents

Portugal offers two exemptions for Portuguese residents who sell a property they used as their primary residence. You can benefit from reinvesting the proceeds in a new primary residence (the “rollover rule”), and/or if you are a retiree, you can reinvest into your pension or long-term savings plan.

If you are reinvesting the proceeds into a new home, you are exempt of Portuguese capital gains tax by satisfying the following criteria:

• You can prove you’ve registered the property in your name.
• The new permanent residence is located in Portugal or in another country within the European Union or the European Economic Area that has a tax treaty with Portugal.
• You buy the new home within a specific time window. This window begins two years (24 months) before you sell your first home and ends three years (36 months) after that sale.
• You settle into your new residence within six months of the three-year deadline.
• You reinvest the entire proceeds, including incidental costs, legal fees, and real estate agent fees.

You can avoid CGT in Portugal if you put the money into a life assurance policy. These policies are a smart way to hold your investments.

If you choose a pension fund instead, you must follow a specific technical rule, which indicates the annual payments you receive cannot be higher than 7.5 percent of the fund’s total value.

Note: It is highly beneficial to consult with a financial tax advisor to understand your tax obligations better. They can help calculate the Capital Gains Tax rate in Portugal, based on your specific circumstances.

How to calculate Capital Gains Tax for non-Portuguese residents?

As of 1 January 2023, the Portugal capital gains tax for non-residents is the same as for residents, taxed at 50 percent of the capital gains.

Portugal uses progressive tax brackets to calculate the CGT based on your worldwide income. For non-residents, the rates range from 12.50 percent to 48 percent on Portuguese-sourced capital gain. They are not taxed on their foreign income itself.

The table below covers the Personal Income Tax rate (IRS) in mainland Portugal.

Source: PWC Portugal

Note: As a non-resident, you should always consult with a tax advisor about any tax obligations. Your final tax liability may be affected by the tax treaty agreement between Portugal and your country of residence, which determines which country has the primary right to tax the gain.

Capital Gains Tax for corporate real estate

Capital Gains Tax (CGT) on real estate sold by a company in Portugal is not subject to a separate CGT rate. The profit is treated as part of the company’s ordinary income and is taxed under the Corporate Income Tax (Imposto sobre o Rendimento das Pessoas Coletivas or IRC) regime.

The taxation is calculated based on a standard rate subject to surcharges and potential reductions. For companies, the calculation is done at the accounting level, and the gain is taxed as a business profit.

You can calculate the net gain with the following formula:

Sales Proceeds – (Acquisition Value – Accumulated Depreciation/Amortization)

The main difference between personal and corporate taxation is the inclusion rate. Exactly 100 percent of the net gain is included in the company’s taxable profit. But the gain itself can be partly deferred.

The Portuguese tax law allows for 50 percent of the net capital gain to be excluded from the company’s taxable profit in the year the asset is sold. The amount excluded from taxable profit is then deducted from the acquisition cost of the new asset. The law applies to the new asset if the sales proceeds are reinvested in qualifying fixed assets, such as real estate, intangible, or biological assets.

The taxable gain is then taxed at standard IRC rates, which are progressive based on the company’s total profit.

For corporate real estate, gains vary from 21.5 percent for small companies in a low-surcharge municipality to over 30 percent for very large companies due to the state surcharges.

The table below covers the corporate income tax (IRC) rates in Portugal:

Considering buying property in Portugal? Contact a local buyer’s agent or real estate agent to navigate the property landscape and maximize your investment returns. Agents can connect you with tax advisors, contractors, and real estate lawyers. With expert help, you can better understand the Capital Gains Tax on property.

Key Capital Gains Exemptions and Reliefs in Portugal

The key Capital Gains Tax (CGT) exemptions and reliefs in Portugal apply to:

• Primary residence investments (residents only). You can get a full or partial CGT exemption when you sell your main home in Portugal. To qualify, the net sale proceeds must be reinvested into a new primary residence in the EU or EEA. You must complete the process within 36 months after the sale or 24 months before the sale.
• Retirees or seniors. If the seller is over 65 years old or retired and reinvests the proceeds from their primary home into a pension fund or a long-term savings product within six months, they are eligible for a full CGT exemption.
• Pre-1989 properties. Properties obtained before 1 January 1989 are often exempt from Capital Gains Tax when sold.

Read more about property taxes in Portugal in our ultimate guide.

How to reduce your Capital Gains Tax exposure in Portugal?

With careful planning, expert advice, and correct documentation, you can minimize your tax burden. The capital gains arising from selling a primary residence can be fully or partially exempt from tax if the net proceeds are reinvested into a new primary residence in Portugal, the EU, or the EEA within a 36-month window.

Certain types of life insurance policies can offer significant tax advantages. For example, Unit-Linked Life Insurance (Seguros de Vida), is one of the most efficient tools for transferring wealth to beneficiaries in Portugal.

The documentation required to lower your taxable gain can include:

• Acquisition deed
• Sales deed/contract
• Proof of payment, such as IMT (Property Transfer Tax), Stamp Duty (Imposto de Selo), Notary or legal fees paid at the time of purchase.
• Energy certificate

Note: You may need to provide additional documentation, such as invoices, to support eligible costs. These invoices must comply with the rules set by the Portuguese tax authority or Autoridade Tributária e Aduaneira (AT).

Goldcrest: How We Can Help You 

Goldcrest is a buyer’s agent that is based in Lisbon. We provide expert, impartial advice on real estate investments and how to buy property in Portugal. From scouting out the perfect property through to property acquisition, we have you covered throughout the process.

If you are looking to purchase property in Portugal, don’t hesitate to get in touch. Our team of skilled experts is available to solve all your real estate doubts, helping you with the property search and offering insightful expertise and strategic advice.

Why choose Goldcrest?

• Local knowledge: With offices located across Portugal, our presence nationwide allows us to assist you personally across the country.
• Independent service: As an independent buying agent, we do not represent any development or project. Our service is entirely tailored toward each individual client, providing you with everything you need to secure the perfect property at the best possible price. As an impartial advisor on the market, we work solely on behalf of our client and provide a service tailored to your needs and requirements.
• Streamlined process: Our real estate agents speak English and Portuguese, and our service is completely focused on providing you with a hassle-free buying experience, saving you time.
• Experienced team: Our expert real estate team has a vast local knowledge of the Portuguese property market. We have cutting-edge technology and metasearch tools at your disposal to provide full market coverage, ensuring the best investment choices and negotiated prices.
• Network of partners: We have a close network of partners, including lawyers, property management services, builders, architects, designers, and landscape gardeners, again saving you time and hassle by providing you with trusted experts in their field of work.