Quick answer: Portugal’s list of tax havens, the so-called “blacklist” of jurisdictions with clearly more favourable tax regimes, currently set out in Ministerial Order (Portaria) no. 150/2004, as amended, is now squarely before the Court of Justice of the European Union. In Case C-661/25, Meritpanorama and Others, the Portuguese Tax Arbitration Tribunal (CAAD) has asked the CJEU whether the aggravated rates of IMT (10%) and IMI (7.5%) imposed on Portuguese real estate held through entities controlled by residents of blacklisted territories violate the free movement of capital under Article 63 TFEU. A ruling against Portugal would force a wholesale rethink of the country’s domestic blacklist regime and could open the door to refunds, restructuring opportunities, and a long-overdue alignment with the EU list.
For expats and investors with property exposure in Madeira or mainland Portugal, this is a development that deserves close attention.
What Is Portugal’s List of Tax Havens?
Portugal’s list of tax havens is a unilateral, domestic blacklist of countries, territories and regions deemed to have “clearly more favourable tax regimes.” It was first approved by Ministerial Order (Portaria) no. 150/2004 of 13 February and has been amended several times since, most recently by Ordinance no. 292/2025/1 of 5 September 2025, which removed Hong Kong, Liechtenstein and Uruguay from the list with effect from 1 January 2026.
Inclusion on Portugal’s list of tax havens triggers a wide range of aggravated tax measures across the Portuguese tax system, including:
- A 35% withholding tax on certain types of capital income paid to entities resident in blacklisted jurisdictions.
- An aggravated rate of IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis) of 10% on the acquisition of Portuguese real estate by entities resident in those jurisdictions, or by Portuguese entities indirectly controlled from them — instead of the usual progressive rates ranging from 0% to 7.5%.
- An aggravated annual IMI (Imposto Municipal sobre Imóveis) of 7.5% on urban properties held under such structures, against ordinary IMI rates of 0.3% to 0.45%.
- Loss of the exemption regime for certain foreign-source income under the previous Non-Habitual Resident (NHR) regime and the current IFICI+ framework where income originates from blacklisted jurisdictions.
- Application of the Controlled Foreign Companies (CFC) rules, with attribution of profits to Portuguese resident shareholders.
- A heavier compliance and reporting burden across corporate income tax (IRC), personal income tax (IRS), and stamp duty.
In short, Portugal’s list of tax havens is not a symbolic device. It is a real, operational mechanism that materially changes the tax bill of investors connected, even indirectly, to listed jurisdictions.
The Meritpanorama Case (C-661/25): The Question Before the CJEU
On 8 October 2025, the CAAD referred a series of preliminary questions to the CJEU in proceedings brought by Meritpanorama, Unipessoal, Lda and two other Portuguese companies against the Portuguese Tax and Customs Authority. The companies are resident in Portugal but indirectly held by entities domiciled in the Cayman Islands, one of the jurisdictions on Portugal’s list of tax havens.
The case challenges Article 17(4)(b) of the IMT Code and Article 112(4)(b) of the IMI Code, the provisions that impose the 10% and 7.5% aggravated rates respectively. The CJEU has been asked, in essence, to decide:
- Whether the application of an aggravated property tax rate, triggered solely because the taxpayer is directly or indirectly controlled by an entity resident in a jurisdiction on Portugal’s list of tax havens, constitutes a restriction on the free movement of capital under Article 63 TFEU.
- If so, whether the fight against tax fraud and evasion can constitute an overriding reason in the public interest capable of justifying that restriction.
- If a justification exists, whether the Portuguese regime nonetheless goes beyond what is necessary because:
- the taxpayer is given no opportunity to disprove the presumption of abuse by demonstrating that the structure rests on valid commercial and economic reasons; and
- the analysis is conducted on a purely territorial basis, even where Portugal has signed instruments for mutual administrative assistance and exchange of information with the jurisdiction concerned.
This is, in substance, the same legal architecture that the CAAD has already started to dismantle. In Case 494/2024-T, the arbitration court annulled a 35% rate applied to a UAE-resident taxpayer’s real estate capital gain, reasoning that residency in a blacklisted jurisdiction does not, by itself, justify aggravated taxation, particularly where a tax treaty with an exchange-of-information clause is in place. The Meritpanorama referral now puts that logic on the desk of Luxembourg.
Why Portugal’s List of Tax Havens Is Increasingly Hard to Defend
From a tax-policy perspective, Portugal’s list of tax havens carries several structural weaknesses that the Meritpanorama case makes particularly visible.
1. An Irrebuttable Presumption of Abuse
The aggravated IMT and IMI rates apply automatically. The taxpayer has no realistic mechanism to demonstrate that the holding structure has economic substance, follows ordinary commercial logic, or was put in place for non-tax reasons. EU jurisprudence has consistently rejected such irrebuttable presumptions of evasion or abuse. A regime that condemns first and asks no questions later is, by design, vulnerable to a proportionality challenge under EU law.
2. A Purely Territorial Criterion
The trigger is corporate residence in a listed jurisdiction, regardless of the substance of that entity, the nature of the investment, or how many tiers of ownership separate the listed entity from the Portuguese property. A pension fund, a regulated investment vehicle, and a letterbox company all receive identical treatment if any one of them sits on the list.
3. Inconsistent State Practice
Portugal has signed double tax conventions and tax information exchange agreements with several jurisdictions that nevertheless remain on the list. Where instruments of administrative cooperation exist, the argument that aggravated taxation is “necessary” because Portugal cannot otherwise verify the substance of the structure becomes considerably weaker.
4. Arithmetic That No Longer Holds
For a property of average value, the difference between an annual IMI of around 0.4% and an annual IMI of 7.5% is the difference between holding an asset and being economically pushed to dispose of it. Likewise, an IMT of 10% versus a marginal 6.5% on acquisition is not a marginal anti-abuse adjustment; it is a structural cost that frequently destroys the economics of a real estate investment, irrespective of whether any abuse exists.
5. A List That Is Out of Step With EU Practice
Portugal’s list of tax havens still includes 74 jurisdictions following the January 2026 removals, while the European Union’s official list of non-cooperative jurisdictions is far shorter and built on more focused, transparent criteria (fiscal transparency, fair taxation, BEPS implementation). The divergence is increasingly difficult to justify on rational grounds.
What a CJEU Ruling for the Taxpayers Would Mean
A favourable decision for the taxpayers in Meritpanorama would not, on its own, abolish Portugal’s list of tax havens. It would, however, have several immediate consequences.
Mandatory legislative review. Articles 17(4)(b) of the IMT Code and 112(4)(b) of the IMI Code, and, by analogy, the entire architecture of blacklist-related provisions, would have to be revisited. At a minimum, the Portuguese legislator would need to introduce a substance-based escape valve allowing taxpayers to demonstrate that their structures are not artificial.
Pressure to align with the EU list. A clear ruling from Luxembourg would give the Portuguese Government the political cover it has lacked for years to abandon the domestic blacklist as the operational backbone of anti-abuse policy, and to align with the more proportionate EU non-cooperative list.
Refund claims and pending litigation. Taxpayers who have paid IMT at 10% or IMI at 7.5% solely on blacklist grounds would be in a position to claim refunds, with compensatory interest. The precedent of the long withholding-tax saga involving non-resident investment funds suggests that the Portuguese State may not move quickly, and that interest costs to the Treasury could be material.
A reset for structuring. Investors who previously avoided Cayman, BVI or other listed jurisdictions purely to escape Portuguese aggravated taxation may regain access to these vehicles where genuine commercial reasons exist, provided substance is properly documented from the outset.
Practical Implications for Expats and Investors in Madeira and Mainland Portugal
For clients of MCS holding or considering Portuguese real estate, whether on the mainland or in the Autonomous Region of Madeira, the immediate practical takeaways are the following.
Review existing structures. If a Portuguese property is held, directly or indirectly, through an entity resident in a jurisdiction on Portugal’s list of tax havens, current IMT and IMI assessments should be reviewed with tax counsel. In some cases, it may be appropriate to file administrative or arbitration claims now, in order to preserve refund rights pending the CJEU’s decision.
Document substance proactively. Even in the most favourable scenario, a future regime is likely to operate as a rebuttable presumption: aggravated rates triggered by territorial criteria, but disapplied where the taxpayer can demonstrate genuine commercial purpose. Investment rationale, business plans, board minutes, and operational substance should be documented contemporaneously, not reconstructed after the fact.
Watch the moving parts. Portugal’s list of tax havens is itself in motion. The 2025 removals of SAR Hong Kong (China), Liechtenstein and Uruguay, the entry into force of the new UK–Portugal Double Taxation Convention in January 2026, and the broader policy debate around the IFICI+ regime all sit alongside the Meritpanorama referral. Restructuring decisions should be calibrated to that moving picture, not to a static reading of the law as it stood twelve months ago.
Do not assume universal application. The aggravated rates apply only in tightly defined cases (typically, indirect control by a listed-jurisdiction entity). Many cross-border structures are not caught at all. A targeted technical analysis is far more useful than blanket assumptions.
Frequently Asked Questions
What is Portugal’s list of tax havens?
Portugal’s list of tax havens is the official domestic blacklist of jurisdictions deemed to have clearly more favourable tax regimes, set out in Ministerial Order no. 150/2004 of 13 February, as amended (most recently by Ordinance no. 292/2025/1). Inclusion on the list triggers aggravated tax rates and special anti-abuse measures across the Portuguese tax system.
How does Portugal’s list of tax havens affect property tax?
Where the owner of Portuguese real estate is controlled, directly or indirectly, by an entity resident in a jurisdiction on Portugal’s list of tax havens, IMT applies at a flat 10% on acquisition (instead of 0%–7.5% progressive rates) and IMI applies at a flat 7.5% per year (instead of 0.3%–0.45%).
What is the Meritpanorama case (C-661/25)?
Meritpanorama and Others is a preliminary reference made by the Portuguese Tax Arbitration Tribunal (CAAD) to the Court of Justice of the European Union in October 2025. It asks whether the aggravated IMT and IMI rates linked to Portugal’s list of tax havens are compatible with the free movement of capital under Article 63 TFEU.
Will Portugal’s list of tax havens be abolished?
A CJEU ruling in favour of the taxpayers would not automatically abolish Portugal’s list of tax havens, but it would force a substantial revision, most likely the introduction of a substance-based defence and, plausibly, a gradual alignment with the shorter and more focused EU list of non-cooperative jurisdictions.
Can investors claim refunds of IMT or IMI paid under the aggravated rates?
Where IMT or IMI has been paid solely because a structure includes an entity resident in a jurisdiction on Portugal’s list of tax havens, refund claims may be available. The applicable deadlines and procedures depend on the specific facts and the route chosen (administrative review, judicial proceedings, or CAAD arbitration). Tax advice should be obtained promptly, as time limits are short.
How MCS Can Help
Madeira Corporate Services (MCS), founded in 1996, supports expats, family offices, real estate developers, and international investors holding or considering Portuguese real estate, both in Madeira and on the mainland. Our team of lawyers, chartered accountants, and tax consultants advises on:
- Reviewing existing real estate holding structures exposed to Portugal’s list of tax havens.
- Filing protective administrative or arbitration claims in light of the Meritpanorama referral.
- Structuring new acquisitions with appropriate substance, documentation, and tax efficiency.
- Cross-border planning involving the Madeira International Business Centre (MIBC), double tax treaties, and EU non-discrimination principles.
For a confidential review of your situation, please contact the MCS team directly.
This article is provided for general informational purposes only and does not constitute legal, tax, or financial advice. The application of Portuguese tax law and EU law to any given case depends on the specific facts and the taxpayer’s particular legal and economic context. The Court of Justice of the European Union has not yet ruled on Case C-661/25 and the conclusions of any future judgment may differ from the analysis presented here. Readers are strongly encouraged to seek independent professional advice before making, or refraining from, any decision based on the content of this article. Madeira Corporate Services accepts no liability for any action taken or not taken on the basis of the information contained herein.
Miguel Pinto-Correia holds a Master Degree in International Economics and European Studies from ISEG – Lisbon School of Economics & Management and a Bachelor Degree in Economics from Nova School of Business and Economics. He is a permanent member of the Order of the Economists (Ordem dos Economistas)… Read more
