Portugal plans to increase the Municipal Property Transfer Tax (IMT) on non-resident homebuyers in a bid to cool overseas demand and improve affordability for locals, Prime Minister Luís Montenegro said after a cabinet meeting in Lisbon last week.
The move aims to slow demand from foreign purchasers amid a broader housing package that includes accelerating the issuance of building permits, boosting construction, expanding affordable rental options, and offering tax breaks for young buyers.
Portugal charges IMT once at the time of purchase, when buyers acquire urban or rural property, land, or certain property rights for consideration.
Officials have not released rates or brackets, but experts predict a premium on non-resident purchases that is significantly lower than Spain’s proposed 100% surcharge for non-EU buyers. The current IMT rate in Portugal is capped at 8% for residents.
Balancing Investor Appeal and Local Affordability
Based on government signalling, Ana Figueiras, Head of New Business Development at Insula Capital, expects a cautious design, saying that authorities want to temper demand without undermining Portugal’s investor-friendly reputation or international capital flows. As such, she expects any extra tax to remain “moderate” and below Spain’s proposed levels.
Timing is also uncertain. Figueiras expects no concrete measures before early next year, citing legislative steps and consultations that could face parliamentary resistance and cause delays.
She remains skeptical that the tax will materially ease the housing crunch, pointing to international buyers who account for only 5% of transactions in the past year. She argues that even a slowdown at the margin will do little without addressing supply bottlenecks, including slow licensing, high overall taxation, and insufficient public investment in affordable and social housing.
Over the past decade, Portugal has recorded the lowest housing construction rate in Europe, exacerbating the shortage.
“Without addressing these fundamentals, new taxes on international buyers will provide minimal relief,” she predicts.
Why Now?
The policy aims to address a housing market stretched by rising prices and strong foreign interest. Since 2015, Portuguese home prices have soared 124%, far outpacing the EU’s average rise of 53% during the same period.
Non-EU buyers paid an average of €451,000 per purchase in the first quarter of this year, nearly double that of domestic buyers, who averaged €225,000, according to the national statistics institute; EU buyers averaged €310,000.
Portugal’s appeal, climate, costs, tax incentives, safety, and prior residency routes continue to draw overseas capital, even after the end of real-estate golden visas in 2023.
Henley & Partners projects Portugal could attract over 1,400 millionaires in 2025, alongside surges in Italy and Greece.
Investors Likely to Adjust to Moderate Surcharge
Experts warn of investor jitters and a potential relocation of capital to Spain, Italy, or Greece if taxes rise sharply, especially amid prolonged residency processing times and discussions about lengthening citizenship timelines.
If the surcharge targets non-residents rather than non-citizens, many movers could sidestep it by establishing residency before buying.
Still, Figueiras predicts that Portugal’s core strengths, including its quality of life, safety, political stability, and relative affordability compared to other Western European capitals, will continue to support demand.
If the government opts for a tempered surcharge, she expects investors to adapt and price it into deals, with motivated buyers remaining active.
Only a worst-case, Spain‑style levy would risk a sharp pullback in foreign investment – a scenario Figueiras says is unlikely.
