Using a property as a company's share capital is a practice that can be advantageous for those wishing to set up or increase the capital of a company in Portugal. This approach consists of transferring ownership of a property to the company, contributing to its share capital. However, this process involves several steps and tax and legal aspects that must be carefully considered.

1. Property valuation

The first step in using a property as share capital is to have it valued. The value of the property should be set by agreement between the partners or through an independent, duly accredited valuer, to ensure that the value assigned reflects the market price. This valuation is crucial, as the value of the property will determine its contribution to the company's share capital. In addition, if the property is associated with debts or charges, these should be taken into account.

2. Property transfer

In order for the property to be integrated into the company's share capital, its transfer must be formalised through a public deed. The deed must specify all the details of the transfer, including the value attributed to the property and the fact that it is to become part of the share capital. This formalisation is done before a notary, and all the partners or heads of the company must be present in the case of a private limited company, or authorise the operation in the case of a public limited company.

3. Tax implications

The transfer of a property to a company as part of the share capital may entail the payment of certain taxes. Municipal Property Transfer Tax (IMT) is the most common, but in some situations, depending on the nature of the transaction, there may be an exemption from this tax. For example, if the property is being transferred to a company that already owns the property, or in the case of a merger, the operation may be exempt from IMT. However, Stamp Duty is generally applicable to this type of transaction, as well as any capital gains if the property has appreciated in value since its acquisition until it is incorporated into the company's capital.

4. Registration at the Registry Office

Once the public deed has been formalised, the property must be registered in the company's name at the Land Registry Office. This registration is compulsory and guarantees that the company is officially the new owner of the property. In addition, this step is essential so that the property can be counted as part of the company's share capital and for legal and tax purposes.

5. Accounting obligations

Once the property becomes part of the company's assets, it must be recorded in the company's accounts as a tangible fixed asset. The value of the property must be reflected in the balance sheets and financial reports, and the company will also have to record the depreciation of the property over time, in accordance with the accounting standards in force.

Advantages and disadvantages

The main advantage of using property as share capital is the possibility of strengthening the company's capital structure without the need to inject immediate liquidity. This can be especially useful for companies wishing to increase their capital without resorting to loans or other forms of external finance. In addition, the company will be able to use the property as collateral to obtain credit in the future.

However, it is important to consider the tax implications and costs associated with transferring the property, such as paying taxes and notary fees. In addition, incorporating a property into the share capital can limit the original owner's flexibility regarding the sale or use of the property, as it becomes the property of the company.

In short, using a property as a company's share capital can be an effective strategy, but it must be done with due financial and legal analysis to ensure that it is advantageous for both the company and its partners.

The role of Serro & Andrade

At Serro & Andrade, we closely monitor changes in the tax system and are ready to help companies comply with these new requirements. With an experienced team in consulting and accounting, we assist our clients in adapting to new tax realities, such as the 15% minimum tax for multinationals.

If your company is affected by these new rules or if you want to understand how this measure could impact your operations, contact us. We offer specialized consulting to ensure your fiscal obligations are met efficiently and securely.