How Non-Resident Property Sellers Can Claim a Tax Refund in Portugal
For years, foreign investors selling property in Portugal faced an unfair tax rule that treated them differently from local residents. But following a series of landmark court rulings — including one from the European Court of Justice (ECJ) — the system has finally changed.
If you sold Portuguese real estate before 2023 and paid tax as a non-resident, you may now be entitled to a refund of up to half the tax paid.
The Old System: A Tax Disadvantage for Non-Residents
Until 31 December 2022, anyone classified as a non-resident taxpayer who sold property in Portugal had to pay 28% tax on the entire capital gain — without deductions.
In contrast, residents were taxed on only 50% of their gains, though at progressive rates of up to 48%. This meant that a Portuguese resident selling a property typically faced an effective tax rate of about 24%, while non-residents paid nearly double that.
This clear disparity became a growing source of legal contention among foreign investors.
The Turning Point: The Hollmann Case
The unfair treatment eventually reached the European Court of Justice (ECJ) in a case known as C-443/06, Hollmann v. Portuguese State (2007).
The ECJ ruled that Portugal's approach violated Article 63 of the Treaty on the Functioning of the European Union (TFEU) — the principle guaranteeing the free movement of capital.
This principle is not limited to EU citizens; it extends to non-EU investors as well.
The judgment set a critical precedent: Portugal could not legally tax foreign investors more heavily than residents for selling the same type of property.
What Changed in 2023
Following years of litigation and successful taxpayer appeals in both administrative and arbitration courts, Portugal amended its Personal Income Tax Code (IRS/PIT) effective 1 January 2023.
From that date forward:
• Residents and non-residents are now treated equally.
• Both are taxed on only 50% of the capital gain from the sale of Portuguese property.
• The 28% flat rate continues to apply to non-residents, but now only to half of the taxable amount.
This reform effectively closed a long-standing gap in Portugal's tax system and brought national law into compliance with EU free-movement principles.
Who Can Request a Refund
If you sold Portuguese property between early 2021 and the end of 2022, and were taxed on the full 100% of your capital gain, you may be eligible to claim a refund for 50% of the tax paid.
Portuguese tax law allows you to contest or amend previous assessments within four years of the original tax being levied. Refund requests are filed as administrative claims citing the incorrect application of tax rules prior to the 2023 reform.
How to File the Claim
- Gather documentation — including the property sale deed, tax return, and proof of tax payment.
- Submit a formal reclaim to the Portuguese Tax Authority citing the Hollmann precedent and the subsequent legislative amendment.
- If the claim is rejected, it can be escalated through judicial or arbitration procedures.
Legal assistance is highly recommended to ensure the process is handled correctly and deadlines are respected.
Why It Matters
This change not only ensures compliance with European law but also reinforces Portugal's image as a fair and transparent investment destination. For non-resident property owners, it provides a real financial opportunity — and for the Portuguese market, it signals continued alignment with international best practices.
Professional Support
Investors seeking to recover overpaid tax can rely on specialized legal teams experienced in these cases. Firms like Fresh Portugal have successfully handled multiple claims for non-resident sellers and can guide you through every step — from eligibility review to refund collection.
In Summary
• Who qualifies: Non-residents who sold Portuguese property in 2021–2022
• What's at stake: Refund of roughly 50% of tax paid on capital gains
• Deadline: Four years from the date of original assessment
• Legal basis: ECJ Hollmann ruling (C-443/06) and 2023 PIT Code reform
If you sold property in Portugal as a non-resident, now is the time to review your case — and potentially reclaim what's rightfully yours.