Portuguese State Gains €148 Million from Revised IMT Resale Exemption
The Portuguese government has seen a significant fiscal benefit following changes to the Municipal Tax on Onerous Transfers of Real Estate (IMT) for properties intended for resale. According to a new report, recent legislative amendments have led to a reduction in tax expenditure of €148 million. The changes were introduced in 2023 as part of the previous government's 'Mais Habitação' legislative package.
The core of the policy change involves the timeframe for the IMT exemption granted to entities that purchase properties for the purpose of reselling them. Under the new rules, the property must be sold within one year of acquisition to maintain the tax exemption. This is a significant reduction from the previous three-year period. This change has resulted in a 62.8% decrease in the number of transactions qualifying for the exemption.
These figures were published in a report by the Technical Unit for the Evaluation of Tax and Customs Policies (U-TAX), which is currently conducting a broader assessment of Portugal's tax benefits system. The U-TAX experts noted that the state's tax expenditure on this specific benefit fell from €229.9 million in 2022 to €81.4 million in the last year. The unit has recommended the complete elimination of this tax benefit.
In their official report, the U-TAX experts argue that the IMT exemption for resale activities had become a regressive benefit. They state that it was primarily benefiting high-end market segments and was no longer serving its original purpose of maintaining liquidity in the broader market. The report suggests that ending the benefit would "restore market efficiency by eliminating transactions motivated by tax reasons" and ensure "competitive neutrality among all market participants."
The Ministry of Finance has not yet issued a formal response to the U-TAX report's recommendation. However, the current legal framework remains in place. For real estate developers and investors, this means that any property acquired for resale must be transacted within the one-year deadline to avoid the IMT liability. This has significant implications for business models that rely on medium-term renovation and resale timelines. Navigate Portuguese property regulations with expert guidance at realestate-lisbon.com.
