FAQs about legal issues

Not necessarily. A will drawn up in Sweden cannot be directly executed in Portugal, because even though it may follow the formalities of the Swedish law, it does not fulfill the formalities of the Portuguese law. For example: wills in Portugal are drawn up exclusively by the Notary and they follow a legal formality, namely the presence of 2 witnesses and the Notary witnessing the whole procedure and reading it's content out loud.

Due to the discrepancy of the different internal succession laws and to the increasing relocation of citizens across the EU, the ECS (European Certificate of Succession) has been created.

Therefore, since 17.08.2015 it is possible for any for citizens to handle the legal aspects of an international succession by ensuring that a cross-border succession is treated coherently, under a single law and by one single authority.

The ECS is issued by the authority dealing with the succession, and can be used by heirs, legatees, executors of wills and administrators of the estate to prove their status and exercise their rights or powers in other Member States. Once issued, the ECS will be recognized in all Member States without any special procedure being required.

In case the citizen does not have a ECS, then the most efficient way to deal with a succession is to draw a new will in Portugal, because it can be immediately executed without any delays.

Banks can concede loans of up to 90% of the purchase price in case the citizen is acquiring a primary residency and of up to 80% in case of secondary habitation.

Nationality and source of income are key factors in determining the % of the loan, which will be granted.

When acquiring a property in Portugal, one must declare the matrimonial assets regime under which it is married. In Portugal there are 3 regimes, namely i) full separation of assets, ii) community of acquisition (predominant regime) and iii) full joint of assets.

In case of the divorce, assets must be divided according to the matrimonial assets regime as follows:

i) full separation of assets: unless the property is the primary residency of the couple, divorce will not affect the ownership and the owner is entitled to sell it without the other spouses' permission,

ii) community of acquisition (predominant regime) and iii) full joint of assets: divorce will affect the ownership, in the sense that the property belongs to the couple and both have to autorize the sale.

In Portugal and when purchasing a house you pay an annual municipal tax which varies from 0.3% to 0.45% of the fiscal value of the property, depending of the municipality.

The fiscal value of the property is assessed by the tax office and takes into consideration various aspects, namely location, size, usage.

Fiscal value is not related to the market value.

In order to calculate the Capital Gains Tax, one needs to use the following formula:

NET PROFIT = property’s sale value – (property’s purchase value x currency’s coefficient) - charges with the purchase and the sale (broker, notary fees, , ...) - charges incurred with property in the previous 12 years (improvements, works, ).

Once you have reached the net profit, you then need to apply a rate, which vary from 13% to 48% on 1/2 of the net profit. The rate is progressive, which means that the higher the income the higher the rate.

Reinvestment of capital gains by individuals with fiscal domicile in Portugal

A tax resident who acquires a property as his/her own permanent residency may be exempted from the payment of capital gains in case the sale value (difference between the sale price less loans) is fully reinvested in the acquisition, construction or works of a new permanent home. In this case, the reinvestment must be made within 36 months, or 24 months prior to the sale, either in Portugal or in any other EU country.