Undivided Inheritances: How to Avoid Higher AIMI Taxes by March 31

Within the scope of the Additional Municipal Property Tax (AIMI), undivided inheritances require particular attention from heirs and those responsible for managing the estate. Failure to communicate relevant information to the Portuguese Tax and Customs Authority (AT) in a timely manner may result in a higher tax burden.

AIMI is levied on the total taxable asset value (VPT) of urban properties intended for residential use, as well as land designated for construction, held by a taxpayer.

In the case of undivided inheritances, properties may be treated for tax purposes as belonging to an entity equivalent to a legal person. This classification can lead to increased taxation, particularly when the total taxable value of the properties exceeds €600,000.

To avoid this higher tax burden, the estate administrator (cabeça-de-casal) must submit an electronic declaration to the Tax Authority identifying all heirs and their respective shares in the inheritance. This communication must be made by March 31.

Subsequently, each heir must confirm their share with the Tax Authority by April 30.

By following this procedure, the undivided inheritance will no longer be taxed as a single taxpayer for AIMI purposes. Instead, the tax will be assessed individually on each heir, in proportion to their respective share of the estate.

This approach may prove more tax-efficient, particularly when there are multiple heirs.

Compliance with these deadlines ensures that the tax is calculated individually for each heir, rather than being applied to the estate as a whole. For this reason, it is advisable to seek specialized legal and tax advice before making any decisions.

VPA – Sociedade de Advogados and its team are available to provide legal assistance in this matter, including the analysis of undivided inheritances within the AIMI framework and the assessment of the various legally available options. A case-by-case evaluation may help identify the most appropriate legal solution and the most tax-efficient outcome for the heirs involved.