Tax planning for real estate investment in Portugal requires knowledge of the tax laws in Israel and Portugal. Before making a real estate investment in Portugal, it is recommended to consult with your accountant to find out what your tax obligations are as a result of this investment.

The State of Israel and the Portuguese Republic signed a tax treaty whose main purpose is to prevent double taxation and prevent tax evasion. The agreement was signed in 2006 and ratified during 2007/8.
In general, the convention operates according to the OECD model convention.

The parts of the agreement relevant to real estate investment in Portugal state that:

– A resident of Israel who generates taxable income in Portugal, will deduct from the tax in Israel the tax paid in Portugal. The amount of the credit does not exceed the amount of tax payable on the aforementioned income in Israel.

– An Israeli company that owns 25% or more of the share capital of a company resident in Portugal will allow Israel to deduct when distributing a dividend Corporate tax and tax on the dividend paid in Portugal. The amount of the credit shall not exceed the amount of tax that this income will require in Israel.

– Tax on capital gains generated by an Israeli resident from the transfer of real estate in Portugal can be charged in Portugal. Profit from the sale of shares of companies whose most assets are real estate in Portugal, the exclusive right of taxation will be given to Portugal according to law Taxation in Portugal.

Portugal Israel Tax Treaty

This article is not legal or financial advice and an accountant should be consulted.