Succession planning in Portugal involves not only civil inheritance law, but also tax implications when transferring assets after death. Understanding how Portugal handles both inheritance and taxation is essential for anyone with assets or family ties in the country.
No Traditional Inheritance Tax, but Stamp Duty
Portugal does not have a traditional inheritance tax. Instead, asset transfers upon death are subject to Stamp Duty (“Imposto do Selo”) under the Portuguese Stamp Duty Code. The standard rate for inheritances or gifts is 10%. This applies to most assets located in Portugal, including real estate and bank accounts.
Who Is Exempt from Stamp Duty?
There is, however, an important exemption: spouses, descendants, and ascendants, (e.g. including children, parents, and grandparents), are exempt from Stamp Duty on inheritances. All other beneficiaries, such as siblings, nieces and nephews, or unrelated individuals, are subject to the 10% rate on the taxable value of the inherited assets.
How the Tax Authority Determines Taxation
The Portuguese tax authority determines whether Stamp Duty applies based on the situs of the asset. Real estate located in Portugal is always taxable, regardless of the deceased’s place of residence. Movable property, such as bank accounts, may also fall within the Portuguese tax scope.
Choice of Law vs. Taxation
Even if an expatriate residing in Portugal elects the law of their nationality under EU Regulation 650/2012, to govern his estate in Portugal, this choice does not affect the Portuguese tax regime applicable to assets located in Portugal.
The Regulation only governs civil succession matters, who inherits, in what shares, and under which rules, but taxation (such as Stamp Duty) remains subject to Portuguese domestic law.
Therefore, even if a foreign national applies U.K., U.S., or other national law to their succession, Portuguese assets remain subject to Stamp Duty, where applicable.
Why Succession Planning Still Matters?
While Portugal’s system is generally favorable compared to countries with high inheritance taxes, careful tax planning for succession remains essential. Understanding how Stamp Duty applies and when exemptions can be used helps ensure a tax-efficient, legally sound transfer of wealth to the next generation.
