Municipal Property Tax ("IMI")

Municipal Property Tax ("IMI")

Municipal Property Tax (known in Portugal as “IMI”) is a municipal tax which focuses on the ownership of a property located in Portuguese territory. Municipal Property Tax is due by the registered owner of the property as at December 31st, according to the Property Tax Value (known in Portugal as “VPT”).

The Property Tax Value is determined according to a formula foreseen in the Municipal Property Tax Code which takes into consideration the nature and characteristics of each type of property. Municipal Property Tax is applicable according to the following tax rates:

  • Urban Properties: 0.3% to 0.45% (variable according to each municipality);
  • Rural Properties: 0.8%;
  • Properties owned by entities resident in blacklisted jurisdictions (as detailed on the Ministerial Order 150/2004, of February 13, as amended): 7.5%; and
  • Properties owned by companies that are controlled by entities resident in blacklisted jurisdictions (as detailed on the Ministerial Order 150/2004, of February 13, as amended): 7.5%.

Additional to Municipal Property Tax (AIMI)

Pursuant to the State Budget Law for 2017, a new tax, the Additional to Municipal Property Tax (known in Portugal as “AIMI”), was enacted and is effective as from January 2017 onwards. The new tax replaces the Stamp Duty (known in Portugal as “Imposto do Selo”) previously applicable to properties with a Property Tax Value greater than € 1 Million.

Additional to Municipal Property Tax is levied only on urban properties for residential purposes and plots for construction located in Portugal. Urban properties classified for "trade, industry, or services" or as "other types of property" are excluded from Additional to Municipal Property Tax.

The taxable amount corresponds to the sum of the Property Tax Value of the urban properties and construction plots held by each taxpayer reported on January 1st of each year.

Deductions/Exemptions

  • In the case of individuals and undivided estates, a deduction of € 600,000 is applied to the taxable amount, prior to the application of the Additional to Municipal Property Tax;

  • Married taxpayers or taxpayers under a civil union (união de facto) are entitled to a deduction of € 1.2 million on the sum of the Property Tax Value of the properties owned;

  • The Property Tax Value of the properties that are exempt of, or not subject to, Municipal Property Tax in the previous year is excluded from the taxable amount subject to Additional Municipal Property Tax.

Applicable tax rates

  • For corporations, the Additional to Municipal Property Tax rate is 0.4% of the taxable amount. Properties exclusively allocated to the personal use of the corporation’s board or their spouses, descendants or ascendants, are subject to an Additional Property Tax rate of 0.7%. For taxable amounts in excess of € 1 Million, the marginal rate is 1%, and for taxable amounts in excess of € 2 Million, the marginal rate is 1.5%;

  • For individuals, the Additional Municipal Property Tax rate is 0.7% of the taxable amount after the abovementioned deductions (€ 600,000 or €1.2 million). For taxable amounts in excess of € 1 Million, the marginal rate is 1%, and for taxable amounts in excess of € 2 Million, the marginal rate is 1.5%;
    For properties owned by entities resident in a blacklisted jurisdiction (as detailed on the Ministerial Order 150/2004, of February 13, as amended), the rate is 7.5%.

Recovery or Deductibility for Corporate Income Tax purposes

  • The Additional to Municipal Property Tax may be deducted in the computation of the Corporate Income Tax (known in Portugal as “IRC”). Taxpayers may elect either to deduct the Additional to Municipal Property Tax as a general deductible expenditure or as a specific deduction against the Corporate Income Tax due. In the latter case, the deduction is limited to the portion of the Corporate Income Tax directly linked with income generated from properties used for leasing or accommodation activities and insofar as such properties are subject to Additional to Municipal Property Tax.