Is there inheritance tax in Portugal?

What replaced inheritance tax

Portugal scrapped its inheritance and gift tax in 2004. Today an inheritance is dealt with under stamp duty (Imposto do Selo):

• Spouse, a partner who lived with them as a couple for more than two years (a união de facto), children, grandchildren, parents and grandparents — 0%. Exempt. This covers the great majority of families. A de facto partner has to show the relationship, usually with a certificate from the parish council (junta de freguesia).
• Everyone else (siblings, nephews and nieces, a partner of less than two years, friends) — 10% of what they inherit.
• The 0.8% you may see mentioned elsewhere is not this. It is the same tax — stamp duty — but charged on a different event: a gift of property made during someone’s lifetime. Give a Portuguese house away while you are alive and 0.8% is payable on it, by close family too. Leave the same house in your will and the 0.8% never arises: an inheritance carries the 10% alone, and nothing at all for the exempt family above.

There is no Portuguese tax on the worldwide estate — Portugal taxes the transfer to each heir, and exempts the closest family.

You still have to file — by the end of the third month

Even where nothing is owed, the estate must be declared to the tax authority on the Modelo 1 (Imposto do Selo) return. The deadline is the end of the third month following the month of the death — the month of death itself doesn’t count, so a death on 5 January gives a deadline of 30 April (February, March, April). Banks will want to see the estate has been declared before paying out.

And if the deadline is missed? Two things follow. The tax authority can fine the late return — and it can do so even where the family is exempt and no tax at all was due, because what is late is the filing, not the payment. Where tax is owed, interest is added on top for the delay. There is one relief valve: where there is a genuine, provable reason for the delay, the local tax office can extend the deadline by up to 60 days — but it has to be asked for, and the deadline is otherwise firm. In practice the sharper consequence usually arrives first: until the estate has been declared, the bank will not release a euro of it.

Tax is not the same as fees or disbursements

Three separate things can be involved: any tax (usually nil for close family); our fixed fee for the work; and third-party disbursements. We keep them clearly apart.

A word on tax at home

Portugal exempting close family does not mean there is no tax anywhere — another country, most commonly the UK, may still tax the same estate under its own rules. The Portuguese side of it is ours: we compute the Portuguese succession tax and file the return as part of the work, and we do the same in Spain, France and Italy. What we do not do is your home-country tax — UK inheritance tax, Irish capital acquisitions tax and the rest — and we will tell you plainly, and early, where an adviser at home needs to be brought in.

The same question in our other countries: Spain · Italy · France.