The tax aspects of a holiday home in Portugal

• Process
• Tax/legal

• Portugal

Thinking of buying a holiday home in Portugal? Then take into account the tax consequences. Inform yourself clearly about this in advance. An important distinction is whether the house in Portugal is considered a main residence or a second home. We give some explanation of both situations.

Property in Portugal as main residence

If the holiday home becomes your main residence, it is possible that you will be considered a resident of Portugal and no longer of the Netherlands. In that case, you no longer have to declare the home to Dutch taxes. It does mean that you emigrate to Portugal, which means you have to file an M-biljet in the Netherlands. This differs from the regular P-biljet because the Dutch tax authorities need different information to calculate the correct taxes in the Netherlands. The M-biljet will be your last tax return in the Netherlands, unless you continue to have Dutch sources of income during your time in Portugal. Becoming a resident of Portugal means you have to declare your income in Portugal. This also includes the house.

House in Portugal is your holiday home

In this case, you remain a resident of the Netherlands. The house in Portugal is included in the tax returns in both countries. In the Netherlands, the value of the house (on 1 January of the relevant tax year) must be declared in box 3 as income from immovable property. At the same time, Portugal has the right to tax the property. To avoid double taxation, the Netherlands and Portugal have concluded a tax treaty allowing the Netherlands to grant a deduction.