Before this new norm was applied, investors who realised capital gains between the purchase and sale of securities, saw those gains being taxed at an autonomous rate of 28%. This means that the positive difference between the capital gains and capital losses obtained in any given year, was charged at 28% and separately from the investor’s remaining annual income.

Alternatively, investors also had the option of including these gains into their taxable income for the year and be taxed at their applicable marginal tax rate. This option could be tax efficient if the Income Tax Rate represented a lower amount than 28%.

From January 2023, the Portuguese government will introduce a new legislation, which states that the positive difference between the annual capital gains and capital losses will be mandatorily added to the taxpayer’s annual income every time the following conditions apply in a cumulative manner:

• The underlying assets have been held for a period that is less than 365 days;

• The annual taxable income which will include the positive difference between capital gains and capital losses, is equal to or higher than €75,009 (the current highest tax bracket for Portuguese tax residents).

This essentially means that higher rate taxpayers that meet the above criteria will have to include the aforementioned gains in their annual income and be taxed at a rate of 48% instead of the habitual 28%, a rule that also applies should the gains be derived from a blacklisted jurisdiction, which has an underlying aggravated tax rate of 35%.

Ultimately, these investors will be looking at a potential loss of one fifth of their capital gains to the tax authorities, a severe aggravation of the fiscal charge already applicable to these higher rate taxpayers since investors have always been given the option (not the obligation) to add these gains to their annual income.

At Blacktower, we can advise you on the best investment strategies to suit your long and short-term goals. We have a range of tax-efficient investment products available that are tax-compliant according to Portuguese law, which can ultimately benefit you and your family. With these, you could stand to make considerable savings on your tax liability as compared to investing in a regular investment account, or through your bank, including a reduction on your Capital Gains Tax liabilities. A further benefit on this type of structure is that it allows you to pass on your wealth to your family without liability to inheritance tax.


For more information contact Blacktower Financial Management on +351 214 648 220 or email info@blacktowerfm.com


This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity.