Is property transfer subject to IVA (VAT)?
The transfer of property is exempt from IVA. The parties can, however, agree to remove exemption and apply IVA, determining the fulfilment of the following conditions: • The buyer has to use the property for an activity subject to taxes. • The vendor cannot be an individual/company to which the “Regime dos Pequenos Retalhistas” (small retailers tax regime) is applied. • The profits and costs related to the conveyance of property should be register separately in the vendor’s accounts. In these situations the vendor is required to obtain a certificate indicating the removal of exemption from IVA from the Portuguese Tax Authorities before the sale. The rate of IVA (VAT) is currently 21% and should be paid by the buyer to the vendor, who should then deliver the IVA to the tax authorities. In the event that the parties remove the mentioned IVA exemption, stamp duty is no longer due on the property sale, unlike the IMT, which remains payable.
