Personal name or company? For some Algarve buyers, a corporate structure changes the tax maths entirely. For most, it just adds cost and paperwork. Buying property in Portugal through a company is one of the most over-recommended and under-explained ideas in the market, a structure that can be genuinely smart for the right buyer and a needless complication for everyone else. This guide sets out what a company actually changes, from the taxes you pay on the way in to the annual costs and the way you eventually sell, and where the structure really earns its keep. One warning up front: this is the single area of a Portuguese purchase where generic advice is dangerous, so treat what follows as a framework, not a recommendation.

The myth: a company does not dodge the purchase taxes

The most common misconception is that buying through a company avoids the upfront transfer taxes. On a direct purchase of a property, it does not. Whether the buyer is an individual or a Portuguese company, the acquisition still attracts IMT, the transfer tax, plus 0.8% stamp duty. Buying the bricks is taxed regardless of who signs the deed.

What has changed in 2026 is not whether you pay, but which rate you pay, and that now turns on tax residency.

Residency, not ownership form, is the 2026 variable

Decreto-Lei n.º 97/2026 of 20 May 2026 amended article 17 of the IMT Code to impose a flat 7.5% IMT on the acquisition of urban residential property by any buyer who is not tax-resident in Portugal. The measure had no transitional provision, so it took effect on 25 May 2026 under the general five-day rule.

Three points that are widely misreported and worth stating plainly:

• There is no price threshold. The flat rate applies at every value. It is not capped, floored, or disapplied below some ceiling.

• It replaces the progressive scale entirely for those buyers, along with any exemption or reduction that would otherwise apply.

• It follows tax residency, not nationality, and not corporate form. The relief route of becoming a Portuguese tax resident within two years is available to individuals; a non-resident company cannot become tax-resident in the same way, so a foreign holding company buying Algarve residential property is squarely inside the 7.5% and has only the letting route out of it.

That letting route is worth knowing: if the property is placed on the residential rental market at up to 2,300 euros a month, under a contract signed within six months of purchase and maintained for at least 36 months inside the first five years, the Tax Authority will cancel the difference between the 7.5% paid and the standard rates. The claim carries a six-month deadline from the qualifying event.

The structural point for this article is simple. For a foreign buyer, residency status now moves the purchase-tax number more than ownership form does, and it is worth modelling before you decide how to buy.

Where a company genuinely changes the maths

The real differences appear after the purchase, in the annual taxes.

On the holding side, a company pays AIMI at a flat 0.4% on the tax value of its residential property, with none of the 600,000 euro allowance that an individual enjoys. Worse, a property kept for the personal use of a shareholder can be taxed at the higher individual AIMI rates. For a single family home, that is a recurring cost you would usually avoid entirely by owning in your own name.

On the income side, the comparison is closer than it used to look, and this is where a lot of older advice goes wrong.

Rental profits inside a company are taxed under IRC, Portugal's corporate tax, at 19% in 2026, with a reduced 15% rate on the first 50,000 euros for qualifying small companies and Small Mid Caps, plus a municipal derrama of up to 1.5%.

An individual letting residential property does not pay a flat 28%. That figure is out of date and now applies only to non-residential lettings, meaning commerce, industry, services and rural land. Residential leases are taxed at an autonomous rate of 25%, falling to 15% for contracts of five to under ten years, 10% for ten to under twenty years, and 5% for twenty years or more. Since Decreto-Lei 97/2026 there is also a 10% band for moderate-rent residential contracts, where the rent does not exceed 2,300 euros a month, running to 31 December 2029.

That changes the conclusion. Against 25% the corporate rate still looks lower on the face of it, and after deductible costs and depreciation it often is. Against the 10% moderate-rent band, which most ordinary Algarve long-lets will fall inside, the company is usually the more expensive route before you have even paid the accountant. And in every case there is the second layer: getting the profit out of the company as a dividend is taxed again. That double step is exactly why the comparison is genuinely case-by-case, and why an eventual sale needs its own analysis, which we set out in our guide to capital gains tax for non-resident sellers.

The exit, and the limits of the share deal

The classic argument for a company is the exit. Instead of selling the property and triggering the next buyer's IMT, you sell the shares in the company that owns it. In practice, Portugal has closed much of this door. IMT is charged when someone acquires a controlling stake, broadly 75% or more, of the quotas in a private limited company (a sociedade por quotas) that owns Portuguese real estate, so a straightforward share sale of a single-property company will often attract the tax anyway. Opaque offshore structures fare worse still: entities based in blacklisted jurisdictions face punitive property-tax rates, 7.5% on IMI among them, which is why the old offshore-company route has largely died out. Where a company can still make sense for succession is in holding and passing on real estate across a family, but only when the share-transfer and inheritance rules have been properly modelled, as we discuss in inheriting property in Portugal.

The running costs people forget

A company is a business, and it has to be run like one. Budget for an accountant, annual corporate tax filings and ongoing bookkeeping, which realistically adds somewhere in the low thousands of euros a year before you have paid a cent of actual tax. For a portfolio of rental units, that overhead is trivial and easily absorbed. For a single holiday home, it can quietly outweigh any benefit the structure was supposed to deliver.

So when does it make sense?

As a rough guide, a company starts to make sense when there is a genuine business behind it. A portfolio of rental properties, a development or commercial project, or a structured plan to hold and transfer real estate across a family can all justify the structure, especially where corporate tax treatment of rental profits and a clear succession plan outweigh the extra cost. It can also interact with Portugal's wider tax landscape, including incentive regimes we cover in IFICI explained.

For a single home you intend to live in or use yourself, the honest answer is usually no, and in 2026 it is a firmer no than it was. You take on AIMI exposure with no allowance, personal-use rules, corporate tax on any letting where an individual might qualify for a 10% band, annual compliance, and, if the company is foreign, the flat 7.5% IMT with only one narrow way out of it. Model your own numbers with a Portuguese lawyer and accountant, because the right answer genuinely depends on your situation.

Frequently asked questions

Do you avoid IMT by buying through a company?

No. On a direct property purchase, IMT and stamp duty apply whether the buyer is an individual or a company. And selling the company later does not reliably avoid it either, because acquiring a controlling stake of roughly 75% or more in a quota company that owns Portuguese property triggers IMT.

Is a company more tax-efficient for rental income?

Sometimes, but less often than people assume. A company pays IRC at 19% in 2026 (15% on the first 50,000 euros for qualifying small companies) plus a municipal derrama. An individual letting residential property pays 25%, dropping to 15%, 10% or 5% for longer contracts, and 10% for moderate-rent contracts at up to 2,300 euros a month. Extracting profits as dividends is taxed again, so the net outcome depends on the numbers and your plans.

What changed for non-resident buyers in 2026?

Decreto-Lei n.º 97/2026 introduced a flat 7.5% IMT for buyers who are not tax-resident in Portugal, on urban residential property, in force since 25 May 2026. It applies at every price level, with no exemptions or reductions. Individuals can reclaim the difference by becoming Portuguese tax-resident within two years; anyone, including a company, can reclaim it by letting the property residentially at up to 2,300 euros a month for at least 36 months within the first five years.

Does a company pay AIMI?

Yes. Companies pay AIMI at a flat 0.4% on the tax value of residential property, with no 600,000 euro allowance, and property held for a shareholder's personal use can be taxed at the higher individual rates.

When is buying through a company worth it?

Usually only when there is a real business behind it: a rental portfolio, a development or commercial project, or a properly structured family holding plan. For a single home for personal use, owning in your own name is normally simpler and cheaper.

Structure follows strategy, not the other way around

The right ownership structure is the one that fits your actual plan, and for most buyers of a home to live in, that plan is best served by buying in their own name. A company is a powerful tool for portfolios, businesses and carefully planned succession, but it carries real costs and obligations, and the 2026 changes, on both the transfer tax and the rental-income side, make professional, up-to-date advice more important than ever. Decide the strategy first, then let the structure follow.

Thinking about how to structure an Algarve purchase? Contact ICON Property's team for a personalized viewing tour, and we will connect you with the Portuguese lawyers and tax advisers who model these decisions for our buyers.