Inheritance Tax for UK Expats in Portugal (2026)

Portugal is a common destination for UK nationals retiring or relocating abroad, and the treatment of death-time transfers there differs sharply from the UK system. Portugal abolished its classic inheritance and gift tax in 2004. What remains is a stamp duty, Imposto do Selo, that applies only in limited circumstances and exempts the closest family members entirely.

This guide sets out how Portuguese gratuitous-transfer rules work for 2026, who is exempt, what rate applies to everyone else, and how the position interacts with UK inheritance tax for someone who still has UK assets or UK connections.

• Portugal has no separate inheritance tax; death and lifetime gifts are dealt with under stamp duty (Imposto do Selo).
• The headline stamp duty rate on gratuitous transfers is 10%.
• Spouses, civil partners, descendants (children, grandchildren) and ascendants (parents, grandparents) are exempt.
• Imposto do Selo applies only to Portuguese-situated assets, not worldwide assets.
• Real estate carries an extra 0.8% transfer stamp duty, giving an effective 10.8% on property passing to non-exempt heirs.
• UK inheritance tax can still apply separately, based on the deceased's UK position rather than Portuguese residence.

Portugal has no inheritance tax, only stamp duty

There is no estate or inheritance tax in Portugal in the sense UK readers will recognise. Since 2004 the only charge on a gratuitous transfer of assets, whether on death or by lifetime gift, is stamp duty. The charge falls on the person receiving the asset rather than on the estate, and it is calculated on the market value of the asset passing to that beneficiary.

A second feature matters for anyone with assets outside Portugal. Imposto do Selo is territorial. It applies to assets situated in Portugal, such as Portuguese real estate, bank accounts held with Portuguese institutions, securities lodged in Portugal and Portuguese-registered vehicles. Assets located elsewhere, including UK property or UK investments, fall outside the Portuguese charge.

Who is exempt and what rate applies

The exemption for close family is the central point. Transfers to a spouse or civil partner, to descendants such as children and grandchildren, and to ascendants such as parents and grandparents are exempt from the 10% charge. In practice this means most family estates passing down a direct line attract no Portuguese stamp duty at all.

Where a beneficiary falls outside that exempt circle, for example a sibling, a niece or nephew, a friend or an unmarried partner who is not a registered civil partner, the 10% rate applies to the value of the Portuguese-situated assets received. Real estate passing to a non-exempt beneficiary attracts an additional 0.8% transfer stamp duty, so the effective rate on property is 10.8%.

The death and any stamp duty liability are declared to the Portuguese Tax and Customs Authority by the end of the third month following the month in which the death occurred. A death in March, for example, carries a 30 June declaration deadline. Reporting is required even where an exemption removes the actual charge.

How this sits alongside UK inheritance tax

A favourable Portuguese position does not switch off UK inheritance tax. UK IHT is charged on the worldwide estate of a person whose estate is within the UK net, and from 6 April 2025 the UK moved from a domicile-based test to a residence-based regime that brings in the worldwide estate of a "long-term resident". Someone who has lived in Portugal for many years may eventually fall outside that long-term resident test, but UK-situated assets such as a UK house remain within the UK charge regardless of where the owner lives.

Because the two systems work on different principles, the same estate can be exempt in Portugal yet still face a UK IHT bill on UK assets. The current UK nil-rate band is GBP 325,000, with a residence nil-rate band of up to GBP 175,000 where a home passes to direct descendants. Verify both bands and the long-term resident rules against GOV.UK before relying on any figure, as thresholds and the residence-based regime are subject to change.

Pensions, forced heirship and timing

Two further points often surprise UK expats in Portugal. First, Portugal applies forced heirship rules under its civil code, reserving a defined share of the estate for close family. EU succession rules allow a UK national to elect for the law of their nationality to govern succession through their will, which can change who inherits compared with the default Portuguese position. Second, UK pension treatment is changing: from 6 April 2027 the UK government has announced that most unused pension funds will be brought within the scope of UK inheritance tax. Anyone with a UK pension and a Portuguese estate plan should confirm the current scope and start date of that measure before acting.

This article is for general information only and does not constitute financial, tax or regulatory advice. Kaeltripton.com is not authorised or regulated by the FCA. Pension and tax rules differ by country of residence and change over time. Verify any figure with official sources such as GOV.UK, HMRC or the FCA, and take advice from a suitably authorised adviser in your country of residence before acting.

FAQ

Does Portugal have an inheritance tax?

No. Portugal abolished its classic inheritance and gift tax in 2004. Death-time and lifetime gratuitous transfers are now dealt with under stamp duty, Imposto do Selo, rather than a separate inheritance tax.

What is the stamp duty rate on inheritances in Portugal?

The headline rate is 10% on the value of Portuguese-situated assets passing to a non-exempt beneficiary. Real estate carries an extra 0.8% transfer stamp duty, giving an effective 10.8% on property.

Who is exempt from Portuguese inheritance stamp duty?

Spouses, civil partners, descendants such as children and grandchildren, and ascendants such as parents and grandparents are exempt. The 10% rate applies only to beneficiaries outside that close-family circle.

Does the stamp duty apply to assets outside Portugal?

No. Imposto do Selo is territorial and applies only to assets situated in Portugal, such as Portuguese property, bank accounts and securities. Assets located elsewhere fall outside the Portuguese charge.

Can UK inheritance tax still apply if I live in Portugal?

Yes. UK IHT works on different principles, including UK-situated assets and, since April 2025, a residence-based test for the worldwide estate of a long-term resident. A Portuguese exemption does not remove a possible UK charge.