Portuguese inheritance law
Portuguese inheritance law catches many expats by surprise – usually at the worst possible time.
If you have lived in Madeira for any length of time, own property here, or have family members who may be affected by your estate, it is worth understanding how the Portuguese system works before you need it. This guide explains the key points in plain English.
Important: This article is for general information only. Every estate is different. Always take qualified legal and financial advice for your specific situation – see the RIP Madeira Services Directory for professionals serving Madeira.
Portugal does not have inheritance tax in the traditional sense
This often surprises people from the UK, Ireland and other northern European countries. Portugal abolished its formal inheritance tax (imposto sobre herança) some years ago. In its place, the relevant tax is Imposto do Selo – Stamp Duty – which applies to the transfer of assets on death.
The critical point is who is inheriting:
- Direct family members – spouse or civil partner, children, grandchildren, and parents — are completely exempt from Imposto do Selo on inherited assets. If you are leaving everything to your spouse and children, the Portuguese tax burden is nil.
- Everyone else – siblings, cousins, friends, partners who are not legally married or in a civil partnership, stepchildren who have not been legally adopted — pays Imposto do Selo at 10% on the value of what they inherit.
This is generally more favourable than the UK’s inheritance tax regime, which applies at 40% above a threshold. However, the family exemption only applies to direct family as defined above — the definition is narrower than many people assume.
Important: Unmarried partners who are not in a registered civil partnership (união de facto) do not automatically qualify for the family exemption. If this applies to your situation, take legal advice as a priority — registering a civil partnership in Portugal is a straightforward process.
Making a will in Portugal
If you own property or assets in Portugal, a Portuguese will (testamento) is strongly recommended – even if you already have a valid will in your home country.
Under EU Succession Regulation (Brussels IV), EU residents can elect for the law of their nationality to govern their estate, but the default is the law of the country where they were habitually resident at death. For most long-term Madeira residents, that is Portuguese law, which has specific rules about forced heirship that cannot be overridden by a foreign will.
A Portuguese will is prepared by a notary (notário) and registered in the national wills register. The process is straightforward and relatively inexpensive – typically a few hundred euros. It provides legal clarity and significantly simplifies the estate administration process for your heirs.
- Make a Portuguese will if you own property in Portugal.
- Review your existing will if you have moved to Portugal since making it — especially if your family circumstances have changed.
- Consider whether your partner needs to be included in a civil partnership registration to ensure inheritance protections apply.
The habilitação de herdeiros — establishing the heirs
Unlike some countries where a will is simply ‘executed’, Portugal requires a legal process called habilitação de herdeiros to formally establish who the legal heirs are before any assets can be transferred. This is handled by a notary and requires:
- The official death certificate (certidão de óbito)
- Documentary evidence of the relationship between the deceased and each heir — birth certificates, marriage certificates as applicable
- The Portuguese will if one exists, or documentation establishing intestacy
- Identification documents for all heirs
The process typically takes several weeks to a few months depending on the complexity of the estate and the availability of documents. If heirs are based in multiple countries, this can take longer. A Portuguese solicitor (advogado) or notary can manage this process on your behalf.
Property and the Finanças
Portuguese property (imóveis) forms part of the estate and must be declared to the tax authority (Finanças) as part of the estate process. The declared value for tax purposes is typically the Valor Patrimonial Tributário (VPT) – the rateable value – rather than the market value, which can be significantly lower.
Any property left to direct family members is still exempt from Imposto do Selo, but the declaration and transfer process must still be completed formally. Failure to do so creates legal complications that can be costly to resolve years later.
Info: If the deceased owned property jointly with a surviving spouse or partner, take legal advice before assuming the property automatically transfers. Joint ownership in Portugal does not work identically to joint tenancy in common law countries.
Pensions and accounts
Portuguese state pensions (pensões) stop on death and must be notified to Segurança Social promptly. Any overpayment after the date of death must be returned.
Private pension arrangements and life insurance policies usually pass outside the estate — directly to named beneficiaries – and are not subject to Imposto do Selo. Check the specific policy terms.
Bank accounts in Portugal are frozen on notification of death. Access requires the habilitação de herdeiros documentation. Allow several months for this process when planning the estate timeline.
Getting the right advice
Estate matters in a foreign country are complicated, and the stakes are high. The good news is that Madeira has qualified professionals – Portuguese advogados, notários, and independent financial advisers – with specific experience in cross-border estate matters for expat residents.
The RIP Madeira Services Directory lists verified legal and financial professionals serving the island. When choosing an adviser, look for someone with experience in both Portuguese law and the law of your home country if significant assets exist in both.
The time to arrange your affairs is before they need to be arranged. A straightforward consultation with a notary or solicitor while things are calm costs a fraction of what it costs to unpick a complicated or undocumented estate after the fact.