When you buy a property in Portugal in your name, the first step is the Preliminary or Promissory Contract (Contrato Promessa de Compra e Venda).
This is a legally binding contract between vendors and buyers signed before a Notary. Upon this signature the buyer generally pays a 10% non-refundable deposit. The contract usually states exactly who the buyers and vendors are, a description of the property, confirmation that there is clear title, and the terms of payment and completion. Both parties should be represented by a local lawyer.
Upon completion, the Escritura (Final Deed) is signed in front of the Notary who checks all the documentation and sees that the IMT (property transfer tax) has been paid. At this stage, the full purchase price is also paid. From time to time and with the agreement of both parties, a part of the purchase price may be withheld from the vendor until certain aspects of the deal are fulfilled. For example, there may be a snagging list to deal with. In these circumstances, the buyer's lawyer generally holds the 'retention' until all paperwork and other outstanding issues are resolved.
Once the deed and all other associated transactions are completed, the buyer's lawyer registers the new owner of the property in the Land Registry (Registo Predial). Buyers should request a copy of this registration for their files
Many properties in Portugal are owned by a corporate structure. Today these corporate structures are usually situated in the UK, Malta or Delaware.
The property itself is an asset of the company and buyers purchase the shares of the company. This transaction takes place under the jurisdiction of the area in which the company is domiciled. Both parties do still require a local lawyer as the usual searches on the property here in Portugal must be carried out, and most local lawyers are familiar with this type of corporate transaction.
A Share Purchase Agreement is drawn up, the usual deposit paid and a completion date set in the usual manner. The immediate benefits of such a transaction are its simplicity, confidentiality and the fact that all purchase and sale documentation is in the English language. Potential fiscal benefits are that there is no property stamp duty or property transaction taxes to be paid when buying a property already registered in a company. Additionally there is no Capital Gains Tax to be paid when selling the company that owns the property in the future.