This was a legitimate, convenient and commonplace way of acquiring property in Portugal. When a property owned by an Offshore Company is bought, it is the shares of the company rather than the property itself, which change hands - the property merely being an asset of the company. By buying Offshore you avoid property transfer tax (IMT) and notary and registration costs. Inheritance Tax avoidance was another plus. Although buying Offshore is quicker and it cuts out part of the normal bureaucratic procedure, one should still carry out all of the searches, checks and inspections mentioned previously.
HOWEVER, in November 2003, during the overhaul of all property taxes in Portugal, the Portuguese Government introduced new legislation. Included in this was a clause which obliges any Company registered in an Offshore base included in a “Black List” to pay 5% IMI per annum. With the new valuation process (see below) this could mean the annual taxes increasing to an unacceptably high level. There are a number of ways to alleviate this increase and advice should be sought from your Lawyer.
For further information regarding Offshore property acquisition please download:
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