DL 97/2026 combines a 7.5% IMT flat rate on non-resident purchasers (new CIMT Article 17.º, n.º 10) with a moderate-rent leasing pathway that opens partial IMT cancellation, an RSAA full IRS/IRC exemption, a 10% IRS / 50% IRC regime under Article 45.º-C EBF, and a capital-gains reinvestment exclusion.
Decreto-Lei n.º 97/2026, of 20 May, implements the housing fiscal package authorised by Lei n.º 9-A/2026, of 6 March, with a focus on increasing the supply of housing through moderate-rent leasing. For non-resident investors, the package combines a 7.5% IMT flat rate on the acquisition of residential property by non-residents (introduced as Article 17.º, n.º 10 of the CIMT) with a set of incentives where the property is committed to residential leasing within rent caps the Law defines as moderate. The headline elements are: a partial-cancellation pathway on the 7.5% IMT where the property is leased under moderate-rent conditions for at least 36 months in the first 5 years (or where the investor becomes Portuguese tax resident within 2 years); a new Regime Simplificado de Arrendamento Acessível (RSAA) that exempts qualifying rental income from IRS and IRC; a parallel Article 45.º-C of the Estatuto dos Benefícios Fiscais (EBF) with a 10% IRS flat rate and 50% IRC inclusion for moderate-rent income earned up to 31 December 2029; and a capital-gains exclusion under Article 10.º of the CIRS for proceeds reinvested in residential properties committed to moderate-rent leasing. This post sets out each element for a non-resident investor weighing a residential investment in Portugal.
What counts as “moderate price” and “moderate rent”: the gateway to benefits
The incentives in DL 97/2026 are conditioned on the underlying property or lease meeting limits the Law defines as moderate. The two operative ceilings are formula-based, not fixed cash amounts.
| Qualifying use | Statutory formula | Illustrative 2026 value |
|---|---|---|
| Long-term residential lease | Monthly rent ≤ 2.5 × the retribuição mínima mensal garantida (RMMG) for 2026 | EUR 2,300 / month (RMMG 2026: EUR 920 × 2.5) |
| Sale | Sale price ≤ the upper limit of the 2nd IMT bracket under Article 17.º, n.º 1, al. b) of the CIMT | To be verified against the published DL 97/2026 and the operative 2026 IMT bracket (see fact-check callout) |
These ceilings can be updated by ministerial order, following the rent-update coefficient under the Novo Regime do Arrendamento Urbano (NRAU). For a non-resident investor, verification of the ceilings at the date of the transaction (and at each anniversary if the lease runs) is the first step to securing the tax position.
The 7.5% IMT on non-resident purchasers: rule and reduction pathway
DL 97/2026 introduces a new Article 17.º, n.º 10 into the CIMT. The provision fixes a flat IMT rate of 7.5% on the acquisition of urban property or fractions destined exclusively for housing where the purchaser is a non-resident, with no further exemption or reduction applicable by default, save for three carve-outs:
- The purchaser is already a Portuguese tax resident at the date of the acquisition.
- The purchaser becomes a Portuguese tax resident within 2 years of the acquisition date.
- The property is committed to residential leasing at moderate rent (within the formula-based cap above), and is effectively leased for at least 36 months, whether consecutive or not, within the first 5 years after the acquisition.
Where one of carve-outs (1) to (3) applies, the taxpayer may apply to the AT for cancellation of the differential between the IMT paid at 7.5% and the IMT that would have resulted from the ordinary progressive rates of Article 17.º, n.º 1 of the CIMT. The operational effect is that the non-resident purchaser pays the 7.5% up front and recovers the differential on demonstration that the qualifying condition is met within the statutory window.
A separate IMT exposure operates on the back-end of the transaction under Article 10.º, n.º 5 of DL 97/2026, where the property has been built or rehabilitated under the 6% VAT regime of Verba 2.42.1 of List I to the CIVA and the buyer breaches the 12-month HPP maintenance condition. That regime is treated in a separate MCS post (see internal link list); the present post is concerned with the 7.5% front-end rate.
Taxation of rental income: RSAA exemption and the EBF Article 45.º-C regime
DL 97/2026 reworks the IRS and IRC treatment of moderate-rent residential income, offering two parallel routes.
Regime Simplificado de Arrendamento Acessível (RSAA): full IRS and IRC exemption
The RSAA, approved in an annex to DL 97/2026, applies to residential lease contracts, sublease contracts for residential purposes, and residential subleasing, where each of the following conditions is satisfied:
- The monthly rent is at or below a per-typology cap set in ministerial order, based on 80% of the median rent per square metre in the município, as published by the Instituto Nacional de Estatística (INE).
- The contract carries a minimum term: 3 years for permanent-residence contracts; 3 months for temporary-residence contracts (e.g., students or posted workers).
- The landlord uploads the contract to the IHRU online platform and demonstrates that the contract has been reported to the AT.
Where the conditions are met, the rental income from the qualifying contracts is exempt from both IRS (personal income tax) and IRC (corporate income tax). For a non-resident landlord, the exemption applies in principle to the Portugal-source rental income, subject to coordination with any applicable double tax treaty.
Article 45.º-C EBF: 10% IRS flat rate and 50% IRC inclusion for moderate-rent income
DL 97/2026 also adds Article 45.º-C to the Estatuto dos Benefícios Fiscais, with a parallel regime applicable to rental income from leases destined exclusively for housing at moderate rents. The Article 45.º-C regime runs to 31 December 2029 and operates as follows:
| Taxpayer | Article 45.º-C treatment |
|---|---|
| IRS Category F (residential lease income) | 10% flat rate, unless a more favourable rate applies |
| IRC and IRS Category B with organised accounting | Only 50% of the qualifying income is brought to tax |
For a non-resident with rental property located in Portugal, the practical sequencing is: where the contract qualifies under the RSAA, full IRS/IRC exemption is achievable; where the contract does not qualify under the RSAA but the rent is within the moderate-rent cap, the Article 45.º-C regime delivers an effective rate substantially below the ordinary rules.
Capital gains: reinvestment exclusion under Article 10.º of the CIRS
DL 97/2026 amends Article 10.º of the CIRS to introduce a capital-gains exclusion where the proceeds from the disposal of real estate are reinvested in residential properties committed to moderate-rent leasing. The principal conditions are:
- The reinvestment is in property located in Portugal and committed to residential leasing at rents within the moderate-rent cap.
- The reinvestment is executed between 24 months before and 36 months after the date of the disposal generating the capital gain.
- The reinvested property is effectively leased for housing at moderate rents for at least 36 months, whether consecutive or not, within the first 5 years after the reinvestment. Breach of the 36-month effective-leasing condition triggers taxation of the capital gain in the year of the breach.
For a non-resident investor planning to rotate real-estate assets within a moderate-rent leasing strategy, the reinvestment-exclusion route can hold the capital-gains exposure to zero across the rotation, sujeito a análise caso a caso.
The Madeira angle for non-resident investors
The Madeira reduced VAT rate is 4% from 1 October 2024, under Article 21.º of Decreto Legislativo Regional n.º 6/2024/M, against the regional standard rate of 22%. The 18-percentage-point differential applies to construction or rehabilitation works on residential property qualifying under Verba 2.42.1 of List I to the CIVA in the Region. The 7.5% IMT under Article 17.º, n.º 10 of the CIMT, the RSAA exemption, the Article 45.º-C EBF regime and the Article 10.º CIRS reinvestment exclusion apply on the same legal terms in Madeira as on the mainland; the IMT itself is calculated under the regional fiscal regime applicable to the property.
For a non-resident considering an investment vehicle based in Madeira, the MIBC’s IRC and indirect-tax benefits run on a separate legal track under the Estatuto dos Benefícios Fiscais and complementary legislation, and do not modulate the housing-package architecture. A CINM-licensed corporate vehicle operates the RSAA, the Article 45.º-C regime and the Article 10.º reinvestment exclusion on the same terms as any other developer or landlord.
Coordination with double tax treaties
The non-resident investor’s Portugal-source rental income and capital gains are taxable in Portugal as the situs jurisdiction. Where Portugal has a double tax treaty in force with the investor’s residence state (the treaty network covers more than 80 jurisdictions), the taxing rights on rental income are typically allocated to Portugal under the immovable-property article, with the investor’s home jurisdiction granting either an exemption or a credit for the Portuguese tax. The interaction with the RSAA exemption requires careful sequencing: the Portugal-source income may be exempt in Portugal under the RSAA, but still potentially taxable in the residence state subject to that state’s domestic treatment of treaty-exempt foreign income.
Equivalent sequencing applies to capital gains: where Portugal applies the Article 10.º reinvestment exclusion, the Portuguese gain is zero, but the residence-state treatment of an exempted Portuguese gain depends on the residence-state law. For US, UK, German, French and other treaty-network counterparties, the position should be modelled at the structuring stage.
Where MCS can assist
MCS advises non-resident investors on the residential investment pathway under DL 97/2026 and the related provisions, subject to engagement scope. Areas where MCS can assist include:
- IMT modelling at the acquisition stage, including the 7.5% front-end rate under Article 17.º, n.º 10 CIMT, the three carve-outs (resident at acquisition; resident within 2 years; moderate-rent leasing committed for 36 months in 5 years), and the partial-cancellation pathway under the ordinary progressive rates of Article 17.º, n.º 1.
- RSAA election and ongoing compliance, including the IHRU upload, the AT reporting, the per-typology cap verification against the INE median, and the documentation pack supporting the IRS/IRC exemption claim.
- Article 45.º-C EBF positioning where the RSAA route is not available, including the 10% Category F flat rate and the 50% Category B / IRC inclusion mechanics through 31 December 2029.
- Capital-gains modelling for asset rotation within the moderate-rent leasing strategy, including the 24-month / 36-month reinvestment window and the 36-month effective-leasing condition under Article 10.º CIRS.
- Coordination with the investor’s residence-state position under the applicable double tax treaty, including treaty-article allocation and credit-method or exemption-method interaction with the Portugal-source income and gains.
- For Madeira-based investments, coordination with the regional VAT framework under DLR n.º 6/2024/M and, where applicable, with the MIBC architecture for CINM-licensed corporate vehicles.
The procedural next step for a non-resident investor approaching the regime is a scoping review of the contemplated acquisition and leasing strategy against DL 97/2026, the CIMT, the CIRS, the EBF and the applicable double tax treaty, with an alignment plan for the documentation and compliance position. Engagements are quoted on the basis of that review.
Frequently asked questions for non-resident real estate investors in Portugal
Who qualifies as a “non-resident” for the 7.5% IMT under Article 17.º, n.º 10 CIMT?
A purchaser who is not, at the date of the acquisition, a Portuguese tax resident under Article 16.º of the CIRS. The flat 7.5% rate applies by default to non-resident purchasers of urban property destined exclusively for housing, with three carve-outs that can result in cancellation of the differential against the ordinary rates.
How does a non-resident purchaser reduce the 7.5% IMT to the ordinary progressive rate?
By satisfying one of the three carve-outs in Article 17.º, n.º 10 CIMT: already-resident at the acquisition; becomes resident within 2 years; or commits the property to moderate-rent residential leasing for at least 36 months within the first 5 years. On demonstration, the taxpayer applies to the AT for cancellation of the differential between the 7.5% paid and the ordinary progressive rate.
What rent counts as “moderate” under DL 97/2026?
The moderate-rent cap is 2.5 × the retribuição mínima mensal garantida (RMMG) for the relevant year. For 2026, with an RMMG of EUR 920, the cap is EUR 2,300 per month. The cap can be updated by ministerial order, following the NRAU rent-update coefficient.
What is the RSAA and how does it differ from the Article 45.º-C EBF regime?
The Regime Simplificado de Arrendamento Acessível (RSAA), approved as an annex to DL 97/2026, fully exempts qualifying rental income from IRS and IRC where the per-typology cap (anchored to 80% of the INE municipal median rent per m²), the minimum-term and the IHRU / AT reporting conditions are met. Article 45.º-C EBF is the parallel regime for moderate-rent income that does not qualify under the RSAA: a 10% IRS Category F flat rate and a 50% IRC / Category B inclusion through 31 December 2029.
How does the capital-gains reinvestment exclusion under Article 10.º CIRS work for non-residents?
Capital gains on the disposal of Portuguese real estate by a non-resident are excluded from Portuguese taxation where the proceeds are reinvested in Portugal-located residential property committed to moderate-rent leasing, within a window of 24 months before to 36 months after the disposal, and where the reinvested property is effectively leased at moderate rents for at least 36 months within the first 5 years.
Does an MIBC-licensed corporate vehicle face a different exposure?
No. The housing-package architecture under DL 97/2026 (the 7.5% IMT, the RSAA, the Article 45.º-C EBF regime and the Article 10.º CIRS reinvestment exclusion) does not interact with CINM-licensed status. The MIBC’s IRC and indirect-tax benefits operate on a separate legal track under the Estatuto dos Benefícios Fiscais.
Does the regime apply uniformly in Madeira?
In principle, yes. The 7.5% IMT, the RSAA, the Article 45.º-C EBF regime and the Article 10.º CIRS reinvestment exclusion apply on the same legal terms in Madeira as on the mainland. The IMT is calculated under the regional fiscal regime applicable to the property. The Madeira reduced VAT rate (relevant to the 6% VAT construction regime, treated in a separate MCS post) is 4% from 1 October 2024 under DLR n.º 6/2024/M; the IMT-side architecture is national.
How does the regime interact with a double tax treaty?
The treaty article on income from immovable property typically allocates taxing rights on the rental income to the situs state (Portugal). The investor’s home jurisdiction usually grants either an exemption or a credit for the Portuguese tax. Where the Portugal-source income is exempt under the RSAA, the home-jurisdiction treatment of treaty-exempt foreign income should be modelled at the structuring stage.
What happens if the moderate-rent leasing condition is not met after the IMT cancellation has been granted?
The conditions of Article 17.º, n.º 10 CIMT, in particular the 36-month effective-leasing condition, run on the back-end of the transaction. Breach of the condition exposes the previously cancelled IMT differential to recovery by the AT under the ordinary tax-procedural rules, sujeito a análise caso a caso of the specific breach situation.
This article is provided by Madeira Corporate Services for general informational purposes only. It reflects Lei n.º 9-A/2026, of 6 March, and Decreto-Lei n.º 97/2026, of 20 May, as published in the Diário da República, together with the related amendments to the CIMT, CIRS and the Estatuto dos Benefícios Fiscais (including the new Article 45.º-C EBF and the new Article 17.º, n.º 10 CIMT), in force at the date of preparation. It does not constitute legal, tax or financial advice. Several parameters in the article (moderate-rent and moderate-price ceilings, per-typology caps under the RSAA based on 80% of the INE median, minimum-residence and minimum-leasing conditions, capital-gains reinvestment windows) are formula-anchored or to be fixed by ministerial order, and the operative 2026 values should be verified against the current statutory and regulatory parameters before reliance. The interaction with any applicable double tax treaty is jurisdiction-specific and should be assessed on the residence-state position. MCS accepts no liability for actions taken or omitted on the basis of this article. For advice on a specific matter, please contact us.
Rosana Rodrigues is a co-founder and partner of TFRA Law Firm. Her work mainly involves advising foreign investors in Portugal, particularly in areas of Corporate and Tax law. She has also worked extensively in Shipping law… Read more
