Navigating Inheritance Tax in Portugal: A 2025 Guide for Expats

Published on 1st December, 2025

The Myth: Portugal Has Punishing Inheritance Taxes for Everyone

A common fear among those unfamiliar with Portuguese fiscal law is that the country imposes hefty inheritance taxes on all beneficiaries, potentially eroding a significant portion of an estate passed to loved ones. This perception can cause undue anxiety and might even deter individuals from investing or retiring in Portugal. However, this broad assumption is largely inaccurate, especially when it comes to close family members.

The Reality: Portugal’s Stamp Duty on Inheritances (Imposto do Selo)

Portugal does not have a traditional inheritance tax (Imposto Sucessório) in the way many other countries do. Instead, what applies is a form of Stamp Duty (Imposto do Selo) on the gratuitous transfer of assets upon death or as a lifetime gift. The crucial point is that this Stamp Duty comes with significant exemptions for close family relatives. Specifically, spouses, civil partners (under Portuguese law), descendants (children, grandchildren), and ascendants (parents, grandparents) are exempt from paying this Stamp Duty on assets they inherit or receive as a gift from each other. This is a major advantage of the Portuguese system for most families.

Who Pays What? Exemptions and the 10% Rule

As mentioned, direct family members – spouses, descendants, and ascendants – are exempt from Stamp Duty on inheritances and gifts. However, for transfers of assets to individuals outside of this direct line (e.g., siblings, nieces/nephews, unmarried partners not in a legally recognised civil partnership, friends, or other unrelated beneficiaries), Stamp Duty is levied at a flat rate of 10% on the value of the Portuguese assets being transferred. For gifts of real estate, there is an additional small charge (0.8%) on the property's value. It is important to note that this 10% Stamp Duty applies specifically to assets located in Portugal. The tax is payable by the beneficiary receiving the asset.

Cross-Border Implications: Double Taxation Agreements & Home Country Rules

For expatriates, estate planning is rarely confined to one jurisdiction. It is vital to consider the cross-border implications. While Portugal may exempt a direct heir from Stamp Duty on Portuguese assets, the heir's country of residence or domicile, or the deceased's country of domicile, may still have its own inheritance or estate taxes that apply to worldwide assets, including those situated in Portugal. Double Taxation Agreements (DTAs) between Portugal and other countries may come into play to prevent the same asset from being taxed twice, but these agreements often have specific rules for inheritance taxes and may not always provide full relief. For example, UK citizens remain subject to UK Inheritance Tax on their worldwide assets if domiciled in the UK, regardless of Portuguese rules. Similarly, US citizens are subject to US federal estate tax on their worldwide assets. Therefore, understanding the interaction between Portuguese law and the laws of your home country (or country of domicile) is essential.

Action Plan for Expats: Estate Planning in Portugal

Proactive estate planning is key to navigating these complexities. Here are essential steps for expats:

1. Understand Portuguese Succession Law: Portugal has rules of forced heirship (the legítima), which dictate that a certain portion of the deceased's estate must pass to their direct heirs (spouse, descendants, and ascendants). This can impact how freely you can dispose of your Portuguese assets in your will.
2. Make a Will: It is highly advisable to have a will. For Portuguese assets, consider making a Portuguese will. Under the EU Succession Regulation (Brussels IV), you can choose for the law of your nationality to apply to the succession of your entire estate, including assets in Portugal. This choice must be clearly expressed in your will. Without such a choice, Portuguese succession law (including forced heirship) will generally apply to immovable property in Portugal.
3. Seek Professional Advice: This is the most critical step. Consult with a qualified lawyer and a tax advisor who specialise in cross-border estate planning for expats in Portugal. They can help you understand your specific situation, considering your nationality, residency, domicile, family structure, and the nature of your assets. The experts at PortugalProperty.com can often connect clients with experienced legal and fiscal professionals.
4. Consider Gifting During Lifetime: Lifetime gifts can be a way to transfer assets, but be aware of the Stamp Duty implications. As with inheritances, gifts to spouses, descendants, and ascendants are exempt from the 10% Stamp Duty. However, gifts to others will attract the 10% rate on the value of the Portuguese assets. There are also specific rules and reporting requirements for gifts.

Considering your own family structure and assets, what is the most pressing question you have about Portuguese inheritance rules, and who is the best professional to help you answer it?

Navigating inheritance and estate planning in a foreign country requires careful consideration and expert guidance. By understanding the realities of Portugal’s Stamp Duty system and seeking appropriate advice, expats can effectively plan for the future and ensure their legacy is protected. For further information on property related matters, please visit www.PortugalProperty.com.

Published in: Business / Guide to Portugal / Miscellaneous