Portugal charges no inheritance tax. For UK buyers looking at the Algarve, Lisbon or anywhere else, that’s a major draw. Your family could inherit your Portuguese home without a hefty local tax bill.
But the full picture takes more unpacking. Portugal swapped inheritance tax for stamp duty in 2004. Close family members pay nothing. Yet UK inheritance tax can still hit your worldwide assets โ including that villa overlooking the sea. Understanding how both systems interact matters.
In short: Portugal charges no inheritance tax. A 10% stamp duty covers inherited Portuguese assets instead โ but spouses, children and direct-line family pay nothing. UK buyers face a separate risk: UK inheritance tax at 40% can still apply, and no bilateral treaty covers inheritance between the two countries.
Table of contents
Why Portugal has no inheritance tax
Portugal scrapped its inheritance and gift tax (Imposto sobre as Sucessรตes e Doaรงรตes) in 2004. The government expanded stamp duty (Imposto do Selo) to cover inheritances and gifts instead.
The distinction matters. UK-style inheritance tax hits an entire estate above a threshold. Portuguese stamp duty only targets assets on Portuguese soil โ wherever the deceased or heirs live. A UK bank account, a pension or a Surrey house falls outside the Portuguese tax net entirely. Our guide to Portuguese property taxes covers the broader picture.
The stamp duty rate sits at 10% of the asset’s value. Property attracts an extra 0.8%, totalling 10.8% for non-exempt heirs. Most family members, as we’ll see, pay nothing. These charges sit apart from the costs of buying property in Portugal, which cover IMT transfer tax and notary fees at purchase.
Who pays stamp duty โ and who doesn’t
The exemptions cover most family inheritances. AFPOP (the Association of Foreign Property Owners in Portugal) lists the following heirs as paying no stamp duty at all:
| Exempt heirs | Notes |
|---|---|
| Spouses | Legally married |
| Civil partners | Recognised under Portuguese law (uniรฃo de facto) |
| Children and grandchildren | Including adopted children |
| Parents and grandparents | Direct ascendants |
Everyone else pays the full 10% (or 10.8% on property). That includes siblings, nieces, nephews, cousins and friends.
What does this look like in practice? A spouse inheriting a โฌ400,000 (ยฃ335,000) Portuguese property pays nothing. A sibling inheriting the same home faces roughly โฌ43,200 (ยฃ36,200).
Even exempt heirs must file a declaration with the Autoridade Tributรกria within three months. It’s a formality โ but missing it causes complications. It’s one of the potential pitfalls of buying in Portugal that catches people out.
Capital gains tax on inherited property
This catches many buyers off guard. Sell an inherited Portuguese property and you’ll pay capital gains tax (CGT) on the profit. The taxable gain = the sale price minus the official tax valuation (VPT) at the date of death.
A key change took effect on 1 January 2023. Before that, non-residents paid a flat 28% on the full gain. Residents only paid tax on 50% of it at progressive rates. The European Court of Justice struck down this difference as discriminatory. Now the rules treat residents and non-residents equally. Both pay tax on 50% of the net gain at progressive rates of 12.5% to 48% (2026 rates).
Many online guides still quote the old rates โ so check your sources. The maximum effective rate now sits around 24%. That’s a meaningful drop for non-resident UK owners.
You can reduce the taxable gain through several deductions: stamp duty on the inheritance, notary fees, documented improvements over 12 years, agent fees and inflation adjustments. Properties bought before 1 January 1989 attract no CGT at all.
Residents who sell a main home can reinvest the proceeds in another property within 36 months and claim rollover relief. Non-residents generally can’t access this. If you’re thinking about investing in Portuguese property with inheritance in mind, raise this with a tax adviser early.
How UK inheritance tax applies to Portuguese property
This part catches UK buyers off guard. No double taxation treaty covers inheritance between the UK and Portugal. HMRC’s guidance lists just six countries with UK inheritance tax treaties. Portugal isn’t one of them.
A new UKโPortugal Double Taxation Convention started on 1 January 2026. But it only covers income tax, CGT and corporation tax โ not inheritance.
UK law taxes the worldwide assets of anyone domiciled (or deemed domiciled) here at death. The rate: 40% above a ยฃ325,000 nil-rate band. A direct-descendants allowance raises this to ยฃ500,000.
So a UK-domiciled person owning Portuguese property could owe both UK IHT and Portuguese stamp duty. In practice, the overlap mainly hits non-exempt heirs. Spouses and children pay nothing in Portugal.
HMRC does grant unilateral relief. You can credit Portuguese stamp duty against the UK IHT bill on the same asset. Portugal’s 10% rate falls well below the UK’s 40%, so the credit typically covers the full Portuguese amount. You won’t pay twice. Our article on the UK’s inheritance tax incentive to move overseas explores this further.
| Portugal | UK | |
|---|---|---|
| Tax name | Stamp duty (Imposto do Selo) | Inheritance tax (IHT) |
| Rate | 10% (10.8% on property) | 40% |
| Tax-free threshold | None โ rate applies from first euro | ยฃ325,000 (ยฃ500,000 with residence allowance) |
| What gets taxed | Portuguese assets only | Worldwide assets of UK-domiciled individuals |
| Spouse exemption | Fully exempt | Fully exempt (unlimited transfer) |
| Children exemption | Fully exempt | No exemption โ taxed above threshold |
| Other heirs | 10% on full value | 40% above threshold |
| Filing deadline | Three months from death | Six months from death |
| Will required locally | Not required but strongly recommended | N/A |
| Bilateral treaty | None covering inheritance between UK and Portugal |
The 2025 UK IHT change
From 6 April 2025, UK IHT shifted to a long-term residence basis. HMRC now treats you as UK-domiciled if you’ve lived here for 10 of the past 20 tax years. Once you leave permanently, your worldwide liability tapers over three to ten years.
For British retirees who move to Portugal, this means IHT exposure continues for years after departure. Talk to a cross-border tax specialist early.
Forced heirship rules โ and how to avoid them
Portuguese succession law reserves a mandatory share (the legรญtima) for the spouse, children and (without children) parents. With a spouse and two or more children, two-thirds of the estate goes to them. The spouse gets at least one quarter. You can only freely distribute the rest.
This matters if your wishes differ from the default. You might want your Portuguese property to go entirely to your partner, not split between spouse and children. The legal requirements of buying in Portugal extend to planning for exactly this kind of scenario.
UK nationals can override forced heirship completely. You make an explicit election in your Portuguese will choosing English (or Scottish or Northern Irish) law to govern succession. Article 22 of the EU Succession Regulation (Brussels IV) allows this. Portugal still applies Brussels IV to UK nationals despite Brexit.
You must make this election during your lifetime. Heirs can’t do it after death. Without it, the law of your habitual residence at death governs. A UK national living in Portugal without an election faces Portuguese forced heirship.
Why you need a Portuguese will
Strictly speaking, you don’t need one. Portugal recognises UK wills covering Portuguese assets. But almost every lawyer advising UK buyers recommends the two-will approach: one Portuguese will for Portuguese assets, one UK will for everything else. Our guide on finding a property lawyer in Portugal can help you get started.
The practical benefits are clear. A Portuguese will runs through the Central Wills Registry and local notaries directly. This avoids delays from translating documents, getting Apostilles and waiting for UK Grants of Probate. It saves time and money.
Include the Brussels IV election of English law if you want to bypass forced heirship. The will must be in Portuguese. You’ll execute it before a notary with two witnesses.
One warning many buyers miss: UK wills typically revoke all previous wills. If your UK solicitor updates your will after you’ve made a Portuguese one, tell them explicitly. Otherwise they could accidentally cancel the Portuguese document. Coordinate both wills carefully.
Does the new IFICI tax regime affect inheritance?
The NHR regime closed to new applicants on 31 March 2025. Its replacement โ the IFICI (Incentivo Fiscal ร Investigaรงรฃo Cientรญfica e Inovaรงรฃo) โ goes by NHR 2.0 but works very differently. Our article on Portugal’s new ITS tax scheme covers the detail.
IFICI applies a 20% flat rate to qualifying employment income. It also exempts most foreign-sourced income for ten years. But it targets scientific, tech and innovation professionals. Minimum qualification requirements rule out most retirees.
The key point: IFICI gives no special relief on inheritance stamp duty. Standard CGT rules apply to property sales too. For most UK retirees buying in Portugal, IFICI won’t touch estate planning.
Existing NHR holders keep their benefits for the full ten-year term. For the wider picture on how visa and residency options interact with tax, see our guide to Portugal’s golden visa and NHR changes.
What should I do next?
Three practical steps will protect your family’s inheritance.
Get a Portuguese will drawn up. A specialist lawyer can include the Brussels IV election and coordinate it with your UK will. Speak to one of our experts to find the right partner.
Talk to a cross-border tax adviser. Portuguese stamp duty, UK IHT and CGT all interact. The right advice saves your heirs real money. The 2025 UK IHT changes make this even more pressing.
Factor currency into your plans. When heirs transfer funds between Portugal and the UK, exchange rates affect the value they receive. Our guide to minimising currency risk explains how a specialist can help.
Still in the early stages? Browse Portuguese property for sale or join a Portugal property event to hear from legal and tax experts directly.
Properties for sale in Portugal
Summary
Portugal charges no inheritance tax. Stamp duty replaced it in 2004. Spouses, children and direct-line family pay nothing on inherited Portuguese assets. Everyone else pays 10% (10.8% on property). UK IHT at 40% can still apply โ and no bilateral treaty prevents overlap. HMRC does grant unilateral credit relief. A Portuguese will with a Brussels IV election bypasses forced heirship and speeds up administration. CGT on inherited property now treats residents and non-residents equally, at up to 24% effective. See our guide to how to buy property in Portugal for costs, process and next steps.
No. Portugal scrapped inheritance tax in 2004. A 10% stamp duty now applies to inherited Portuguese assets. Spouses, children, grandchildren, parents and grandparents pay nothing.
It isn’t legally required. But it’s strongly recommended. A Portuguese will speeds up the process, cuts costs and lets you elect English law to bypass forced heirship. A specialist property lawyer can draw one up.
Yes, if you’re domiciled (or deemed domiciled) in the UK at death. UK IHT applies to worldwide assets. You can credit any Portuguese stamp duty against the UK bill. HMRC’s guidance explains how.
Portuguese law reserves up to two-thirds of the estate for the spouse and children. UK nationals can override this by choosing English law in their Portuguese will under the EU Succession Regulation.
Yes. Since January 2023, non-residents pay tax on the same basis as residents. That means 50% of the gain at progressive rates โ not the old flat 28%.
