IMT on the purchase of shares

The Municipal Property Transfer Tax (IMT) generally applies to the direct transfer of real estate. However, Portuguese law also provides for the taxation of certain indirect transfers of property, including, but not limited to, the purchase of shares in companies that own real estate assets.

The rationale of the rule: preventing indirect acquisition of property

The taxation of sales of shares has an anti-abuse nature. Its purpose is to prevent someone from effectively acquiring a property without paying IMT by purchasing the majority of the share capital of the company that owns it. Although legally this is a share transaction, from an economic perspective it may correspond to taking control of the underlying real estate assets. For this reason, the law treats such situations as equivalent to a real estate transfer.

When are the purchase of shares subject to IMT?

Under Article 2 of the IMT Code (CIMT), sales of shares are subject to IMT when two cumulative requirements are met:

1. Real estate predominance: more than 50% of the company’s assets consist of real estate assets, located in Portugal, and that those assets are not allocated to an agricultural, industrial, or commercial activity (excluding the activity of purchase and sale of real estate assets).
2. Controlling position: the acquisition results in a shareholder holding, directly or indirectly, at least 75% of the share capital, or increasing a participation that already exceeds that threshold.

IMT is due only in these cases, where there is significant control over a company whose assets are predominantly real estate.

Conclusion

IMT on sales of shares does not apply to all share transactions, but only to those that, in practice, represent the indirect acquisition of real estate through the control of predominantly real estate companies.

The application of this regime requires an analysis of the company’s asset composition, the allocation of the properties, and the percentage of share capital acquired. Given the complexity of the matter, each transaction should be assessed on a case-by-case basis. VPA is available to provide specialized advice, ensuring proper tax qualification and full compliance with the applicable legal obligations.