V - Municipal Transfer Tax ("SISA")

Transfer Tax - 1

1. Scope

"Sisa", an ancient tax in the Portuguese tax system, is levied on the transfer for consideration of ownership rights or of partial ownership on real estate (immovable property).
The fiscal concept of "transfer" for the purposes of this tax is coincident, in principle, with that of private law, unless otherwise provided for by law, namely with the purpose of preventing tax avoidance.
The Code also includes an exemplification listing of those situations deemed to be a transfer. We may refer as an example departing from the concept of transfer according to civil law the case of a promise of purchasing and sale or a promise of exchange accompanied by delivery (excluding the promise of purchasing of a dwelling house destined to the permanent abode of its acquirer), as well as long term leases, that is to say, those for more than 30 years.
The taxable person is the person who acquires the property.

2. Exemptions

Among the different exemptions of both an effective and personal nature provided for different purposes, we may refer the following:

• - Acquisitions made by the State itself or its local authorities;
  - Purchase of immovable property for resale under certain conditions;
  - Purchase of building land and constitution of surface rights (building lease) if property is intended exclusively for housing;
  - Acquisition of property by a legal person of public utility or of administrative public utility, a museum, library, school, teaching, educational, cultural, scientific, literary or artistic, charitable or social welfare institutions or associations, if designed to the direct and immediate achievement of their aims;
  - Acquisition of urban property or an autonomous fraction thereof intended exclusively for housing purposes, provided that the amount on which the tax would be levied does not exceed Esc. 10 950 000;
  - Transfers between companies authorised to be taxed by their consolidated profit, provided that such transfers are operated during the tax periods in which such authorisation is in force for taxation purposes according to that system;
  - Acquisition of property intended for the construction and installation of hotel or like establishments, previously declared to be of touristic utility;
  - Acquisition by foreign Governments of property exclusively affected to the respective diplomatic or consular missions or designed to the domicile of the head of such mission or consul, as well as land for its construction, subject to reciprocity.

3. The Tax Base

The transfer tax ("Sisa") is levied on the value for which the property in question is transferred. Such value shall be determined in accordance with the following rules:

• 1. There shall be taken into consideration the conventional value, unless the value of the real estate as shown in the register at the date of tax assessment is higher.

Transfer Tax - 2

• 
  
  2. Whenever a valuation is carried out, the value resulting thereof shall be taken into account and shall prevail unless its price is higher.
  3. There are some special rules concerning, in particular, property acquired to the Government and its local authorities, by way of forced or administrative auction, or expropriated for public utility purposes.
  

4. Rates

The general rate is 10 per cent on the transfer of urban property or building land and 8 per cent in all other cases.
In certain conditions, however, reduced rates shall apply, as for instance in relation to the transfer of a building or an autonomous fraction of a building exclusively intended to dwelling purposes:

In applying these rates, the value on which the transfer tax is levied, if higher than 10 950 contos, shall be divided into two parts, one equal to the limit of the highest bracket therein comprised to which the average rate corresponding to such bracket applies, and the other equal to the excessamount, to which the marginal rate corresponding to the immediately upper bracket applies.

5. Assessment and collection

The assessment shall be requested by the parties concerned to the competent tax office at a date previous to the transfer.
As a general rule, the competent tax office for assessment purposes is that of the municipality or district where the transferred property is located.
Transfer tax ("Sisa") shall be paid, in principle, in the day of its assessment, otherwise it may become null and void.
.