Developers urge back pedal on property transfer tax decision for non-residents for international credibility’s sake

The President of Portugal’s Association of Real Estate Developers and Investors (APPII) has warned that the government ’s decision to put up property transfer taxes for non-residents could send out a message that foreign direct investment is not welcome.

Hugo Santos Ferreira told Jornal Económico: “If we penalise foreigners who purchase houses, by making them more expensive, naturally there will be foreigners who will go back on their decision”.

The increase in the Municipal Tax on Onerous Transfers of Real Estate (IMT) for the purchase of housing by citizens not resident in Portugal has gone down like a lead balloon with the real estate sector, which fears a setback in foreign investment in the country and is calling on the government to reverse its decision.

“My suggestion as president of the Real Estate Developers and Investors Association is to eliminate this measure, because it will have a negative impact on the country’s credibility internationally. I am afraid that this message will be understood by foreigners that they are not welcome in Portugal. It was a measure that could have been avoided,” Hugo Santos Ferreira told Jornal Económico (JE).

Moreover, Hugo Santos Ferreira believes that this increase in IMT will have only a small impact (on public coffers) and that this decision contradicts the government’s message about the need to attract foreign investors to Portugal.

“It seems to me a measure a little at odds with what the Government itself understands. Portugal needs foreign investment like we need bread, to boost the economy, create jobs and create opportunities in housing as well, “he said.

The Portuguese Association of Resorts and Residential Tourism (APR) has also called on the government to rethink the measure, asking for it to exclude the increased IMT tax for tourism resorts and developments in low-density areas of Portugal.

Chitra Stern, CEO & Co-Founder Martinhal Group, Martinhal Residences & Edu Hub Lisbon and Board Member at United Lisbon in reaction, said: .“Having spent over twenty years living and building businesses in Portugal, I welcome a constructive debate around fiscal reform, especially if it improves fairness and housing access. That said, I also believe it is vital to recognise the positive role that expatriates and foreign investment have played and continue to play in Portugal’s growth story.

Over the past decade, foreign buyers and expat residents have contributed to economic growth, created demand for quality services, supported local jobs and supply chains, and helped elevate Portugal’s global reputation. As policymakers consider future changes to taxation or property transfer rules, I hope this continues to be balanced with policies that don’t detract from Portugal’s international appeal.

In the UK, we’ve seen how sudden shifts in tax policy can create uncertainty and unsettle investor confidence. The goal should be sustainable growth, not deterrence.  Portugal has become a beacon for international families, entrepreneurs, and long-term investors and with thoughtful policymaking, it will continue to offer both stability and opportunity.”