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To purchase a property in Madeira, you will need the following:

     

    Purchasing property in Portugal can be a rewarding investment, but understanding the necessary steps and documentation is essential for a smooth transaction. Here’s a comprehensive guide for anyone looking to buy property in Portugal, covering everything from obtaining the required paperwork to completing the final deed.

    The first step is obtaining a Portuguese Tax Identification Number (NIF), essential for any legal and tax transactions in Portugal. Both residents and foreign buyers need this, and it can be obtained from the Portuguese Tax Authority (Autoridade Tributária) with a valid passport or ID. Proof of identity, such as a passport or national ID, is also necessary throughout the process and when applying for the NIF. Opening a Portuguese bank account is also crucial, as a local account will facilitate the payment of taxes, legal fees, and other property-related expenses.

    Buyers must present proof of financial means, usually in the form of bank statements or mortgage approval documents, especially if planning to finance the purchase with a mortgage. Although optional, a property survey or inspection is recommended to assess the property’s condition and avoid unforeseen expenses related to repairs or renovations.

    Securing the property typically involves signing a Reservation Agreement, known as the Contrato de Promessa de Compra e Venda. This preliminary contract outlines the terms of the sale, including the agreed price, conditions, and contingencies, and it usually requires a deposit of 10-30% of the property’s value. This down payment secures the purchase, but it is generally non-refundable if the buyer withdraws after signing.

    The formal transfer of ownership takes place with the Final Deed, or Escritura Pública de Compra e Venda, signed at a notary’s office. This process officially registers the buyer as the property owner. During the signing of the final deed, property taxes are paid, including the IMT (property transfer tax), stamp duty, and notary fees. These taxes are based on the property’s value.

    Hiring a lawyer or legal representative is highly recommended, as they can guide buyers through legalities, verify the property title, and ensure the security of all documentation and processes. For buyers relying on financing, mortgage approval is an essential step. Portuguese banks typically require proof of income, credit history, and other financial details before granting a mortgage.

    Working with a local real estate agent simplifies the process by providing area expertise, arranging viewings, assisting with negotiations, and handling transaction details. Following these steps and securing the necessary documents prepares you to navigate the Portuguese property market confidently, ensuring a successful and stress-free experience whether purchasing as a resident or foreign investor.

     

    What is a NIF and why do you need it?

    NIF INFORMATION 

    The fiscal number in Portugal (NIF in Portuguese) is used to identify a natural person by the Portuguese Tax Authority. This number is composed of 9 digits and can be assigned to residents or non-residents in Portugal.

    WHAT DO I NEED A PORTUGUESE NIF FOR?

    The NIF is helpful in all aspects of everyday life. In Portugal, you must have a NIF to:

    • Open a bank account
    • Rent or buy a house
    • Subscribe to services (electricity, water, mobile tariffs, internet, television, etc.)
    • Buy a car
    • Pay taxes
    • Signing a work contract
    • Set up a company
    • Among others

     

    HOW TO GET A NIF IN PORTUGAL

    The tax identification number can be requested at any Portuguese tax office or “Loja do Cidadão” government office. It is necessary to present an identification document or passport and proof of residence in Portuguese territory.

    Citizens residing in the European Union, Iceland, Norway, or Liechtenstein need to present proof of residence in the country of origin and personal identification.

     

    PORTUGUESE NIF FOR NON-RESIDENTS

    Any non-resident citizen in Portuguese territory subject to taxation in Portugal must identify to the Portuguese Tax Authority through a NIF. As in the situations described above, obtaining the NIF requires the presentation of personal identification and proof of residence.

    In case the applicant is resident in a country outside the EU or the European Economic Area (Iceland, Norway, and Liechtenstein) until recently, it was still necessary to appoint a fiscal representative in Portugal.

    However, the Portuguese Government has recently introduced legislative changes that eliminate the need for non-residents to appoint a fiscal representative in Portugal.

    As of 9 July 2022, non-residents in Portugal (taxpayers resident outside the European Union (EU) or the European Economic Area (EEA) can register to receive information from one of the digital notification channels provided for in Portuguese tax law.

    Therefore, taxpayers adhering to this option should be aware that this implies frequently checking these digital channels to ensure that notifications are appropriately received and that the potential deadlines set out in the Portuguese Tax Authorities' communications are met.

    In this regard, we would also like to point out that Portuguese tax law provides that, in most cases, taxpayers are considered validly notified five days after the digital communication has been made available, i.e. there is an administrative presumption that the communication has been well received and acknowledged by the taxpayer.

     

    Step one: Locate your closest Finanças

    These are the government offices where you go to deal with anything tax-related, and that includes getting your NIF.

    If you’re staying in central Lisbon, this one is the closest, but I wouldn’t recommend it—it’s probably the worst one in the city. For faster and relatively better service it’s worth going to this one or this one instead. If you’re staying elsewhere, just search for your closest one on Google Maps.

    Also, take note of when it opens. The ones I linked to above opens at 9 am Monday to Friday.

    Step two: Get address proof from your “home country”

    This isn’t hard. Just bring a bank statement (less than three months old) that lists your non-Portuguese address.

    If you are not registering for a NIF as a non-resident, but rather a Portuguese resident, just bring similar proof of your Portuguese address.

    If you’re an EU citizen living outside the EU/EEA, you could simply get address proof from somewhere in the EU. One option is to change the address on file with your current bank (not all banks support foreign addresses, though) and print your next statement. Or just open an account with one of the many European online banks / fintechs that will allow you to open an account remotely with a European address, and print a statement from them.

    Note: This trick only works for EU/EEA citizens. Non-EU/EEA citizens need a government-issued proof of address (despite being EU residents).

    Step three: Bring your address proof and ID to Finanças

    Finanças has a less than stellar reputation in Portugal—kind of like the DMV in the US—and if you don’t time your visit right, you might stand in line for hours.

    So do yourself a favor, get up early enough to be there 10-15 minutes before they open. If you do this, you will probably only have to wait 10-20 minutes once they open their doors.

    Remember to bring your passport together with your proof of address. If you’re an EU citizen with a national ID card listing your current address, that should also be accepted.

    Note: The button you press to get your number in the line might not say NIF. If not, it will most likely say Número de Contribuinte or something along those lines.

    Step four: Get your NIF on the spot

    Once it’s your turn, just head up to the counter, let them know that you want to register for a NIF, and give the friendly employee whatever information they ask for. You shouldn’t need to justify why you want the NIF, but if they do ask, opening a bank account would be a perfectly good reason.

    Most of the staff will speak at least basic English, so you’ll be fine even without a translator.

    Once you’re done, you will receive a single A4 sheet of paper with the information you provided and your shiny new NIF. You should keep this paper. If you’re opening a bank account it’s a good idea to bring the original with you.

    Step five: There is no step five. You’re done!

     

    Opening a Portuguese Bank Account

    To open a bank account in Portugal you will need:

    • Valid Passport or ID: For identity verification.
    • NIF (Número de Identificação Fiscal): Portuguese tax identification number.
    • Proof of Address: Utility bill or bank statement from your home country.
    • Proof of Income/Employment: Recent payslips, employment contract, or proof of other income.
    • Bank Reference: Some banks may ask for a reference letter from your current bank.

    Different banks may have slight variations in requirements, so it's advisable to confirm with the specific bank.

    The Role of a Lawyer in Property Purchase
    Legal representation is crucial when buying property to ensure that all contracts are in order and protect your interests. Find out why having a good lawyer on your side is a smart move.

    Ready to Make Your Move?

    Start your journey to owning a piece of paradise in Madeira today!