A very common habit among Portuguese families can lead to high fines. Not all cash offers between family members are as simple as they seem. As of 2024, the Portuguese State has changed the rules applicable to donations and there are situations in which financial support “in good faith” can generate tax, fines or reporting obligations to the Finance Department.
Giving money to a child, grandchild or ascendant is a common practice in many Portuguese families, especially to help with house purchases, studies or urgent expenses. But Portuguese law establishes precise rules for these free transmissions, and ignoring them can bring unexpected unpleasantness.
New rules since 2024
Law No. 82/2023 (State Budget for 2024) introduced an important new feature: cash donations of up to 5,000 euros between spouses, civil partners, descendants and ascendants are no longer subject to Stamp Tax. In practice, this means that these amounts do not pay tax nor need to be declared to , as long as they are made by identified bank transfer.
Above this value, the exemption provided for in article 6, no. 1, subparagraph e) of the Stamp Tax Code remains. In other words, even when the amount exceeds 5,000 euros, there is no tax to pay if the beneficiary is a spouse, descendant or ascendant, but it is important to comply with the formalities.
When there is tax and mandatory declaration
Donations outside the direct family circle (for example, from an uncle to a nephew or between friends) are subject to Stamp Tax at the rate of 10% of the amount received (amount 1.2). In these cases, the beneficiary must deliver Model 1 – Participation in Free Transmissions by the end of the 3rd month following the donation.
Even among exempt family members, the declaration continues to be mandatory if what is at stake are assets subject to registration, such as real estate, cars, shares or industrial property rights. Tax does not apply, but participation in Finance is required.
Practical note: it is advisable to use a nominative bank transfer (description “donation of [x] to [y]”) for documentary proof and compliance with ML/FT preventive duties (Law no. 83/2017 and sectoral regulations). It is not a condition for exemption/non-subjection in IS.
Even among exempt family members, there are formalities if there are registrable assets
Even when there is a 10% exemption (direct family circle), participation continues to be mandatory if assets subject to registration, registration or registration are at stake (e.g.: properties, vehicles, shares, IP rights). On properties, the Stamp Tax remains at 0.8% (amount 1.1), even among direct family members.
How to prove the origin of the money
Tax law experts advise that donations be made by nominative bank transfer, indicating “donation” in the description. This gesture creates documentary evidence and helps to fulfill the duties of preventing money laundering (Law no. 83/2017; BdP/CMVM regulation).
The safest way to make a donation is to use the banking system, ensuring documentary record of the operation. For donations of up to €5,000 between immediate family members, there is no tax or declaratory obligation as a rule; Keep proof of transfer.
Cases in which formalities continue
When the amounts exceed €5,000, the exemption remains within the immediate family circle; confirm whether there are registrable assets involved (e.g. real estate, where there is 0.8%). If applicable, Model 1 participation remains mandatory, even if there is no 10% fee to pay.
What changes in cash payments
Regardless of whether it is a donation or purchase, the General Tax Law (art. 63.º-E) prohibits cash payments ≥ €3,000 (residents). For non-residents (non-merchants), the limit is €10,000. To the State, the maximum in cash is €500 (tax payment).
Failure to comply with these limits constitutes a tax offense and may be punished with fines between €180 and €4,500, in accordance with art. 129th of the RGIT. In suspicious situations, authorities may open an investigation based on Law No. 83/2017 (BC/FT).
Donations outside the direct family circle
In donations between people with no ancestry/descendant relationship, such as cousins, uncles, nephews or friends, the 10% tax is due (and, in the case of real estate, 0.8%), and must be paid within the legal deadline. Non-payment implies interest and fines.
Care to be taken with cash
In all situations, avoid moving large amounts of cash. In addition to legal limits, the use of cash makes it difficult to prove the origin of funds and may raise suspicions with the AT or banks.
Paying attention to these rules avoids future problems. Documenting transfers, respecting limits and declaring when required are simple steps that guarantee transparency and legal certainty in all family donations.
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