- Property transactions in Portugal are subject to complex VAT rules.
- Understanding and applying the correct VAT rules is crucial for businesses involved in property development, investment, or management.
- In Portugal, both the lease and transfer of immovable property are generally exempt from VAT.
- This exemption can lead to challenges in recovering VAT on construction costs.
- Two strategies for optimizing VAT neutrality are the option to tax on commercial property and the reverse charge mechanism.
- The option to tax allows businesses to recover VAT on construction costs but requires charging VAT to tenants.
- The reverse charge mechanism allows the developer to defer VAT payment until the property is sold.
- Both strategies require careful planning and consideration of the specific circumstances of the transaction.
Source: internationaltaxreview.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
