Capital Gains

• A company capital gain in Portugal is usually added to regular income.
• For companies, under certain conditions, When the proceeds of the sale of shares and realestate which were held for more than 1 year. Only 50% of the gain is taxable. The 50% gain can be tax exempt, if the proceedes are reinvested. Under certain conditions.
• On the sale of individual's real estate that was used as the vendor's residence, If the proceeds are invested in the purchase of alternative real estate for a residence within a short period as defined in law, the capital gain is exempt from tax.
• For individuals, a capital gain on the sale of shares held for more than one year is tax exempt, for holding of less than one year the tax rate is 10%.

 

Capital gains fall under Cat. G income unless they are considered income of categories B, E or F. Taxable income is the net gain of the year, i.e. total gains less total losses subject to tax.

Only 50% of the net annual gains from the transfer of immovable property, from the cession of leasehold or other rights attached to immovable property contracts are subject to tax. Adjustment of the acquisition cost for inflation is allowed after an ownership period of more than 2 years. Nevertheless, capital gains from the sale of the permanent dwelling of the taxpayer are exempt if the realization value (a) is reinvested in the acquisition, construction, enlargement or refurbishment of another permanent residence or land on which to build such residence in Portugal within 36 months of the sale; or (b) is used to pay for such acquisition up to 24 months prior to the sale.

Capital gains related with the sale of bonds or other debt claims and shares are exempt from IRS if they were detained for more than 12 months. This exemption doesn’t apply to gains on the sale of shares of a company if more than 50% of the company’s assets consist, directly or indirectly, of immovable property situated on Portuguese territory. For other shares and securities the taxable amount is the net gain realized during the year and is subject to a final tax at a rate of 10%. To calculate the annual net gains, capital losses are not considered if they are related with transactions with residents in a listed tax haven. A resident taxpayer may also elect to aggregate the net gains, in which case the 10% tax is considered as an advance payment.
Only 50% of the annual gains related to the sale of intellectual or industrial property or know-how by a taxpayer other than the original creator are subject to IRS.