Selling Your House Abroad and Reinvesting in Portugal: What´s With Tax?

So, you like selling your house abroad and reinvesting in Portugal. Let’s say you’re living in sunny Portugal but own a house in Germany. You’ve decided to sell the German house, which you’ve owned for over ten years, making the sale tax-free in Germany. You’re excited to reinvest the proceeds in Portugal, but you’ve heard rumors about hefty taxes. Here’s a clear, friendly guide to help you navigate the process and ensure you keep more of your money.

The Comedy of Bureaucracy

First, let’s talk about why knowing the rules is crucial.

Imagine this: you walk into the Portuguese tax office, affectionately known as “finanças,” to get some clarity. After explaining your situation to the first employee, you’re send to another, who is out for lunch. So, you come back later only to be send to another employee who eventually directs you to the manager, who refers you to the official online platform. After making an official question on the online platform, you wait and wait, and wait. After two weeks, the big moment, you finally receive a notification by post. It reads that your question can’t be answered without documents of the actual sale. But wait, you haven’t even sold your house yet!

What sounds like an exaggerated comedy is just daily life in the kingdom of bureaucracy. Yes, even professionals can find these matters complex. So, let’s break it down for you.

Tax-Free Sale in Germany

First, the good news when selling your house abroad: Germany won’t tax you on the sale of your house if you’ve owned it for more than ten years. This exemption is a big win, allowing you to pocket all the proceeds from the sale. But what happens when you bring that money into Portugal?

What the Portuguese Law Says

The reinvestment relief for capital gains in Portugal is primarily addressed under Article 10 of the Portuguese Personal Income Tax Code (CIRS). This article outlines the conditions under which capital gains are subject to taxation and the specific provisions for exemptions or deferrals.

Article 10 (Capital Gains)
  1. General Conditions: Article 10 of the CIRS specifies that capital gains from the sale of property are generally subject to taxation. However, exemptions and deferrals are available…
  2. Reinvestment Conditions:
    • The taxpayer must be a resident of Portugal for tax purposes.
    • The reinvestment must be in a property intended for the same use, typically residential.
    • The reinvestment should occur within 36 months following the sale or up to 24 months before the sale.
  3. Documentation Requirements:
    • All relevant bills and documents must include the taxpayer’s name, address, and tax number.
    • The documents must also include the identification number of the property (matriz).
  4. Partial Reinvestment:
    • If only part of the sale proceeds is reinvested, the capital gains tax relief applies proportionally.

Importance of Documentation

The Portuguese tax system is indeed very meticulous about documentation. It is crucial to maintain detailed records of all transactions related to the sale and reinvestment, including:

  • Sale agreements.
  • Proof of reinvestment (purchase, construction, or renovation contracts).
  • Bills and invoices with the taxpayer’s details and the property’s identification number (matriz).

Double Taxation Agreement

Portugal and Germany have a double taxation agreement (DTA), which prevents you from paying tax twice on the same income. According to this agreement, Germany has the primary right to tax the sale of the property. Since the sale is tax-free in Germany, Portugal can, and will, claim the right to tax the capital gains unless specific exemptions or reliefs apply.

Consult a Professional

Given the complexities and potential for significant savings, consulting with a tax professional familiar with both German and Portuguese tax laws is highly recommended. They can provide tailored advice and ensure you comply with all requirements, maximizing your benefits.


Selling Your House Abroad and Reinvesting in Portugal is not as easy as it sounds. Although the specific reinvestment relief for primary residences might not apply in our given scenario, there are several other strategies and legal provisions that might help reduce the tax burden. These include leveraging the Double Taxation Agreement between Germany and Portugal, applying for the Non-Habitual Resident scheme, and exploring tax-advantaged investments in Portugal.


Understanding these rules and planning accordingly can help you navigate the complexities of international real estate investments with confidence and clarity.