To many people purchasing property in Portugal, either as a holiday home or as a permanent residence, can seem fraught with difficulties. You are in a foreign country with a foreign language, foreign laws, taxes and customs, and will rely heavily on your legal advisor or the sales agent to guide you. In your mind you want to be sure that you have proper legal title to your new property, that you do not pay any unnecessary taxes and that your investment is secure, not only for you but especially for your successors.
Traditionally, one of the most suitable ways of owning property abroad, whether you intend to retire to it permanently or just use it as a holiday home, is through a company formed in another country. This need not necessary be what is loosely termed an “ Offshore Company “, but may for example, be a company in a country such as the United Kingdom or Holland. It is also worth noting that the ownership of property world-wide in this way, not just in Portugal, can be beneficial, subject to the individual tax requirements in each different country.
Company registered ownership has become increasingly popular in Portugal over the years so why is it suggested, and what are the specific benefits in Portugal ?
To start with, constituting an “offshore company” is a quick process ( less then 3 weeks ) and the costs of the formation and annual maintenance is relatively low. At present it will cost approx. £ 1.200 which includes already the first year maintenance. What we are dealing with is a share company. The offshore company permits the participation of the whole family in the purchase of the property (each member holding a determined number of shares) and at the same time it provides the beneficiaries with anonymity throughout the whole process of the transaction.
The beneficiaries of the company can be individuals or they even can be other companies already formed or trustees.
Ease of registering has to be one of the principle reasons - you simply choose your company jurisdiction, perhaps subject to the advice of your lawyer, and have the company incorporated. Many firms have companies ready and available on their “shelf“.
Once the company has been incorporated, it is in this name that the purchase of the property in Portugal will be finalised. After completing all the legal procedures from the signing of the promissory contract of purchase and the sale to the signing of the public deed of purchase and sale the property then will be registered in the name of the company.
Those who hold the shares of this company are then the proprietors of all assets acquired in the company name. When you buy a property noy yet held offshore than there are no cost savings: all the taxes and expenses normally paid by individuals have to be paid. But as soon as you wish to sell, the case changes radically.
When a company is the registered owner of the property, SISA tax ( land and building sales tax ), Notarial and Land Registry fees are not applicable. This is because the shares of the company are sold rather than the property itself. A saving which makes the purchase a more attractive proposition to a buyer if you decide to sell. The saving on Notarial and Land Registry and legal fees are approximately 2-3% of the contract price and the SISA tax an average 10% of the contract price.
Therefor when the beneficiary or beneficiaries intend to proceed with the sale of their property the only thing that is required is to transfer the shares of the company to that of the potential purchaser thus automatically transferring all assets registered in the company name. The whole operation could take less than a couple of days, thus very simple and very quick.
Although the transfer of shares is easy as we can see somebody still should do a proper title search to see if th
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