Cape Verde Tax and Law

Over the years we have helped many clients through the legal process in Cape Verde. This page details our understanding of the Tax and Law in the Cape Verde islands. Please view this as a guide rather than gospel as the tax regime and the legislation in Cape Verde is subject to change.

We are happy to refer clients to appropriately qualified solicitors or accountants in Cape Verde.

Real Estate Law and Legal Process for Land & Property Purchases

The purchase of land and property in Cape Verde is subject to Cape Verde law. Local and foreigners alike have full rights to land and property.

We have never heard of Leasehold property in Cape Verde. The legal system is similar to the southern European countries of Spain, Italy and Portugal. Houses and villas are purchased on a Freehold basis. Apartments are bought on a Common Hold basis. That is to say that each flat will own a share of the land and the communal areas on fractional basis relative to the size of apartment purchased.

For off-plan purchases, once the building is finished, the developer will make a declaration of ‘Finish of Works' to the authorities. After this, assuming the development is more than one unit, the developer will apply for the legal separation of the units. Once this is done the process for the legal transfer of ownership can begin.

Property purchases are subject to registration at a Notary Public. This is where the conveyancing or legal transfer of ownership happens. A Notary public is a state official who presides and registers the contractual transaction. Typically, you can appoint someone like your solicitor to do the running around and to represent you at Notary. We are happy to refer clients to a local solicitor.

The sale and purchase of land in Cape Verde is also recorded by the Land Registry Office. Real Estate purchases on Maio are subject to the registering of Title Deeds on Santiago, and those on Boa Vista must be registered on Sal.

At present there is a limited supply of Notaries and other necessary state officials in Cape Verde. Therefore the whole process usually takes 3-6 months. Most developers are happy for you to take charge of the property as soon as it is ready, assuming that you have made all the necessary payments.

Therefore you will notice that many Reservation Agreements for the purchases of property in Cape Verde will state that the last payment is due at ‘Keys' rather than at ‘Notary' or ‘Completion'. Of course you may wish to hold on to the last payment until Notary.

Purchase Taxes for Property and Land in Cape Verde

All the costs, including the Notary fees, are typically about 5.5%-6% of the declared purchase price.

This broken down as follows:

•  3% of this is the I.U.P. tax. This is the Transfer Tax.

•  2.5-3% covers the other administrative costs and taxes such as Stamp Duty, Land Registry fees and the Notary costs.

So for a property purchased with a declared value of €100,000, the taxes and associated costs will be €5,500-6,000. This is payable after the end of construction.

Cape Verdean solicitors charge varying fees. Typically the ones RMDS refer clients to will charge €500-600 for the legal process, with an additional €150-200 for the Power of Attorney.

The Power of Attorney document has to be done at Notary too. Please be aware of this, as we normally recommend clients get this organised well before their property is finished. Your representative in Cape Verde will then be able to can get on with things as needed and you won't have to organise a specific trip for the Power of Attorney.

We have tried to deal with the Cape Verdean consulate in the UK with regards to organising Power of Attorney documents for clients, but this turned out to be far too complicated and time consuming.

Property Holding Tax in Cape Verde

This is a form of Annual Rates Tax or Council Tax. It is taxed at a flat rate of 3% of 25% of the attributed value (0.75% per year). The attributed value is determined by the authorities. This may well be less than the market value.

This is paid in two semi-annual instalments in April and September.

Capital Gains Tax in Cape Verde

In Cape Verde, Capital Gains Tax for property is taxable when sale value is more than 130% of the value of the purchase (these figures relate to the declared values for the purchase and sale). In other words the tax free ‘Allowance' for Capital Gains is for the first 30% of gain. The gain is then taxed at a flat rate of 3% for Capital Gains Tax and 20% for Income tax

The ‘Allowance' for Capital Gains is for the first 100% of gain in the case of land purchased for construction. In other words tax is chargeable if the gain is more than double the purchase price. Again these figures refer to the declared price for the purchase and sale. We would ask you to refer to advice by a suitably qualified Cape Verdean accountant or solicitor for tax in this area, as this allowance relates to constructions in an approved urbanization by local government.

Inheritance Tax/Tax on Gifts of Property in Cape Verde

This is flat rate tax 3% of attributed value, payable by the receiving party. Again the attributed value is determined by the authorities.

Income Tax on Rental Income in Cape Verde

Income tax for non-residents is charged at a flat rate of 20% on the profit. Certain expenses are allowable to be charged against the gross income received. These are:

•  10% allowance for maintenance, or wear and tear

•  30% on any interest paid on a mortgage

•  Property Holding Tax

Other expenditure like condominium fees (or service charges), letting agents fees, accountancy fees, legal fees and other maintenance costs may be allowable.

Costs of purchase or capital expenditure to improve the property are not allowable.

Please note – We accept no responsibility for the information supplied here. It is intended only as a guide.

Cape Verde Tax and Law – last updated June 08