Madeira, an autonomous region of Portugal, has become a top destination for expats and international investors thanks to its mild climate, stunning landscapes, and attractive tax environment. One of the most common questions is: can foreigners buy property in Madeira? This guide provides a detailed legal and practical analysis, covering property rights, purchase procedures, potential restrictions, tax benefits, and investment incentives.
Can Foreigners Buy Property in Madeira?
Principle of Non-Discrimination
Portuguese law imposes no restrictions on foreign property ownership, whether for residents or non-residents. The principle of non-discrimination, enshrined in the Portuguese Constitution and in multiple international treaties, ensures that foreigners enjoy the same rights as nationals when buying, owning, or selling real estate in Portugal, including Madeira.
Property Rights in Madeira
Although Madeira has its autonomous political system, law and administration, property acquisition rules follow national law. Foreigners and locals are treated equally, with no special barriers based on nationality.
Procedures for Buying Property in Madeira
Essential Steps
- Get a Portuguese Tax Number (NIF): Mandatory for all real estate transactions.
- Open a Portuguese Bank Account: Facilitates payment of taxes and property costs.
- Preliminary Contract (CPCV): Commonly signed with a deposit to secure the deal.
- Deed of Purchase (Escritura Pública): Executed before a notary to formalize the sale.
- Property Registration: The new owner must register the property in their name at the Land Registry.
Legal Due Diligence
A full legal and tax due diligence is strongly advised to confirm that the property is free of debts, mortgages, or disputes, and that all municipal taxes are up to date.
Restrictions on Foreign Property Ownership
General Rules
There are no legal restrictions for foreigners buying property in Madeira. The only exceptions may arise for buyers from countries subject to international sanctions or banking restrictions, where capital transfers must be reviewed by authorities.
Special Zones
Purchases in protected natural areas, agricultural zones, or maritime public domain may require special administrative approvals. These rules, however, apply equally to both Portuguese and foreign buyers.
Taxes and Investment Incentives
Madeira’s Tax Regime
Madeira offers competitive tax advantages through its International Business Centre (IBC). Corporate tax rates can be significantly reduced for qualifying investments, with benefits often secured contractually for up to 10 years.
Taxation of Real Estate in Madeira
Taxes on Acquisition
- IMT (Property Transfer Tax): Progressive tax payable by the buyer.
- Stamp Duty (IS): Charged on the transaction value.
Taxes on Ownership and Sale
- IMI (Municipal Property Tax): Annual tax on property ownership.
- Capital Gains Tax: Non-residents selling property in Portugal are taxed on profits, although double taxation treaties may reduce or eliminate the burden
Foreign Investment Protection
Portugal is a signatory to numerous bilateral investment treaties guaranteeing protection against unlawful expropriation, free capital transfers, and access to international dispute resolution mechanisms. This provides additional security for international buyers in Madeira.
Conclusion
So, can foreigners buy property in Madeira? The answer is a clear yes. There are no legal restrictions, and buyers benefit from a stable legal framework, tax incentives, and access to attractive residency options such as the Golden Visa. However, working with a qualified local lawyer is essential to ensure compliance with all requirements and to maximise investment security.
Disclaimer: This article provides general information only and does not replace personalised legal advice. Always consult a qualified lawyer for individual cases.
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