The property owners themselves own shares in the company, most of which until 2003 were registered in Gibraltar, the Isle of Man and other ‘offshore jurisdictions’. When the property is sold, the shares are sold through a share purchase agreement; the company remains the owner of the property and the buyers become the new shareholders.

In 2003 changes in local legislation meant that countries outside of Portugal (sometimes referred to as Offshore Centres) were classified by an international body known as OECD as either Black List or White List jurisdictions. The Black List jurisdictions were for the most part countries that offered beneficial tax regimes that were out of line with the White List countries. The intention being that those on the Black List would be encouraged to fall into line with White List jurisdictions.

Property-owning companies on the Black List faced a higher tax (for details see the taxation article on page 77), and for this reason many decided to re-domicile to other English-speaking countries, principally Malta and Delaware, USA, which were outside the Black List jurisdiction. Malta, being English-speaking and a full member of the European Union, was immediately attractive and many companies moved there. Delaware, being one of the 53 States of the USA also offered security, and many companies re-located there.

At the time the overwhelming view of most clients and their professional advisers was that they wanted to continue to own their properties through a corporate structure, but not in places such as Gibraltar and those other Black Listed jurisdictions. Most clients continue to be of the opinion that the benefits of corporate ownership far outweigh the disadvantages, if such financial penalties can be avoided.

Now in 2007, most of the ‘migrating’ has been completed and the situation has been clarified, giving buyers and sellers confidence that their properties are owned by companies in White Listed jurisdictions.

Today it continues to be quite normal to see Algarvean properties in Estate Agents windows owned by companies in Malta or Delaware. It is completely acceptable for properties to continue to be owned by such companies and the majority of properties in and around Quinta do Lago continue to be sold through the sale of the shares in companies now based in Malta or Delaware.

The Benefits of Corporate Ownership:

The ‘locked in’ CGT liability issue has now become part of the negotiation which we undertake for vendors and buyers. You can be assured that we have considerable experience and are doing this to great effect. We are here to help both sides reach a deal with which they both feel comfortable.