What is a contract assignment in a PC (Promissory contrat)?

A contract assignment is a legal mechanism that allows the prospective buyer to transfer their position in a promissory purchase and sale agreement (PC or CPCV in POrtuguease) to another person. This is common when purchasing off-plan properties or homes still under construction, particularly when the property's value increases before the deed is signed.
Although ownership has not yet been transferred, tax law may consider that an economic transfer has already taken place. In such cases, IMT may become payable before the deed is executed, which can come as a surprise to those unfamiliar with this tax regime.

When can IMT (Municipal Property Transfer Tax) be paid before the deed?

The IMT Code provides for situations in which the tax is due before the definitive acquisition of the property. One of these occurs when the PC includes a clause allowing the buyer to freely assign their contractual position. The mere existence of such a clause may trigger taxation, even if the assignment never actually takes place.
If the contractual position is effectively transferred to a third party, a new taxable event arises. In this case, the assignee becomes responsible for paying the tax on the value of the transaction before the assignment agreement is signed.

What happens if there is no assignment clause?

When the PC does not provide for free assignment, but the buyer transfers their contractual position with the seller's consent, the tax treatment is different.
The assignment itself does not immediately generate tax, but IMT may become payable when the deed is signed. In certain situations, there may be two separate tax assessments: one relating to the original prospective buyer and another to the final purchaser. The aim is to tax each economic stage of the transaction while avoiding double taxation on the same amounts.

Are there any exemptions?

Not all contract assignments result in taxation for the assignor. The law provides exceptions where there is no economic gain from transferring the contractual position or where the property is acquired by a company in the process of being incorporated from the outset.
Taxation may also be avoided where the final purchaser is already identified in the PC or in contracts made for a person to be nominated, provided the legal deadlines for notifying the Tax Authority are respected.
Before signing a PC, it is important to assess the tax implications of its contractual clauses. A simple free assignment clause may bring forward the payment of IMT, making it essential to evaluate the transaction structure in advance and avoid unexpected costs.

Copyrights @ Supercasa