I. INTRODUCTION
Purchasing a property in Cape Verde is for many people a dream as well as a large financial commitment and therefore it is essential to make sure that you choose the right place, the right type of property and that you understand the legal procedure.
As Cape Verde is still an emerging market, please note that it is still difficult and expensive for foreign investors to obtain mortgages from institutions on the islands.
(NB the legal system follows the Portuguese system and is similar to other Western European systems such as the Spanish and French)
II. PROCEDURE FOR THE PURCHASE OF A PROPERTY IN CAPE VERDE
A) PURCHASE WITHOUT BANK LOAN -Deposit
After making a choice on your property, a deposit will be required to secure it. The deposit will then be deducted from the final sales price. PLEASE NOTE: This deposit will not be refunded should the sale fall through. (Usually approximately €1,000 to €2,000).
-Promissory Contract ("Contrato Promessa de Compra e Venda") - sometimes a formal ‘reservation contract’ is also necessary for particular developments
This document states the personal details of both vendor and purchaser, description of the property, the price, payment method and the conditions that shall be agreed later.
In the majority of the cases, a minimum amount of 20% of the total value of the real estate is required on the date the Agreement is signed. Both parties are bound to the purchase once the promissory contract has been signed.
NB. Your local solicitor or lawyer may often have to prepare Powers of Attorney (PoA) in order to deal with this contract on your behalf. As for any other contracts, you should always be provided with copies in English and in Portuguese. The PoA will have to be witnessed by a UK/Irish solicitor (or other nationality as applicable) before being sent to a Cape Verde Consulate to be authenticated. The PoA will then be sent back to your solicitor in Cape Verde.
The solicitor/Lawyer will carry out the following:
If the property is registered:
- ‘Land Charge Searches’ at the local Municipal Authority and Land Registry Offices - i.e. The solicitor/Lawyer will investigate the registry (documents relating to the property) to check whether any third party’s rights/obligations affect the ownership of the property: mortgages, charges, rights of way or any other restrictions.
- A "Certidao do Registo Predial" (which is the land registry certificate), "Planta de Localizacao" (which is the official map showing the property's exact location) and the "Certidao Matricial" (which is the tax information certificate) should be obtained.
If the property is not registered:
- a "Certidao negativa" (certificate confirming that the property in not registered in anyone's name) will be necessary and a "Certidao matricial para o efeito" (which is a tax certificate confirming this). It will then be possible to register the property.
- obtain a tax reference number for the purchaser.
-Final Deed of Conveyance (‘Escritura’)
-The Purchaser will be responsible for notifying the date and place for signature to the Vendor. The Title Deeds are prepared by the Public Notary (according to the Lawyer contract’s draft): Cape Verde does not have private notaries.
The Purchaser can nominate an Attorney/Procurator if he cannot be present at the proposed date in order to act on their behalf through a power of attorney.
To proceed, the following documents are required:
>Identification document (identification card or passport)
>Sale and Purchase Agreement
>Cadastral Register Certificate (issued by the City Council)
>Land Register Certificate (issued by the Land Registry)
>Presentation of taxpayer identification number
> The cost of the Deed is about 2% of the total value of the real estate.
-Conveyance Tax (IUP - Imposto Unico Sobre Rendimentos)
This tax is directly paid in the City Council in which the property is located and its value is 3% of the real estate price.
-The Conveyance Tax is compulsory and should be paid within 30 days after the conclusion of the Title Deeds. If the Purchaser is foreign and owns an emigrant savings account he will be free from the payment.
A copy of the Sale and Purchase Agreement will be required in order to proceed to this payment. >Real Estate Registration
The registration is not compulsory in Cape Verde, but it is advisable as it gives you more security. The registration is carried out by the Land Registry and costs approximately 2% of the total value of the real estate.
The required documents are: +Identification document (Identity card or passport)
+Certificate of the Deed of Sale and Purchase (issued by the Notarial Registry)
+A document confirming payment of Wealth Tax
-Insurance
The insurance is not compulsory but for security and peace of mind we would always recommend to our clients to insure their properties.
B) PURCHASE WITH BANK LOAN
The procedure is similar to the description above, except: -Bank Loan Solicitation
The choice of the Lending Institution is made by the Purchaser in the majority of the cases. The required documents are: >A Lenders Form delivered by the bank
>Sale and Purchase Agreement or a Promise of Sale Statement
>A copy of the identity card or passport of the interested person and of the spouse
>Remuneration Statement
>Last year’s Income Statement
Real Estate’s Registration Whenever the property has been purchased through a bank loan, registration of the property will be compulsory.
The registration is carried out by the Land Registry and costs vary from 2.5% and 3% depending on the interest rate and the duration of the loan. The required documents are: Identification document (Identity card or passport)
Certificate of the Deed of Sale and Purchase (issued by the Notarial Registry)
A document confirming payment of Wealth Tax
III) EXPENSES WITH A REAL ESTATE
a) LAND
The only expense attached to the land is Wealth Tax. This tax is annual and shall be paid in the City Council where the land is located.
Its cost is = (Cadastral Value / 20) X 3%
b) Capital Gains tax
CGT will payable on sale of your property. The tax varies depending on whether the property is:
- a plot of land for construction (taxable if the sales value exceeds a 100% of the initial purchase value),
- any other property (taxable if the sales value exceeds 30% of the initial purchase value).
Invariably, the added value will be taxed at a flat rate of 3%. The payment will be made within 30 days of issue of the Deeds and should be submitted together with a Capital Gains statement (‘Declaracao de mais valias’)
We recommend that anyone thinking of purchasing in the Cape Verde use a bilingual lawyer to check through all paperwork and make sure that everything is in order.
Please contact us for recommended lawyers.
Purchasing a property in Cape Verde is for many people a dream as well as a large financial commitment and therefore it is essential to make sure that you choose the right place, the right type of property and that you understand the legal procedure.
As Cape Verde is still an emerging market, please note that it is still difficult and expensive for foreign investors to obtain mortgages from institutions on the islands.
(NB the legal system follows the Portuguese system and is similar to other Western European systems such as the Spanish and French)
II. PROCEDURE FOR THE PURCHASE OF A PROPERTY IN CAPE VERDE
A) PURCHASE WITHOUT BANK LOAN -Deposit
After making a choice on your property, a deposit will be required to secure it. The deposit will then be deducted from the final sales price. PLEASE NOTE: This deposit will not be refunded should the sale fall through. (Usually approximately €1,000 to €2,000).
-Promissory Contract ("Contrato Promessa de Compra e Venda") - sometimes a formal ‘reservation contract’ is also necessary for particular developments
This document states the personal details of both vendor and purchaser, description of the property, the price, payment method and the conditions that shall be agreed later.
In the majority of the cases, a minimum amount of 20% of the total value of the real estate is required on the date the Agreement is signed. Both parties are bound to the purchase once the promissory contract has been signed.
NB. Your local solicitor or lawyer may often have to prepare Powers of Attorney (PoA) in order to deal with this contract on your behalf. As for any other contracts, you should always be provided with copies in English and in Portuguese. The PoA will have to be witnessed by a UK/Irish solicitor (or other nationality as applicable) before being sent to a Cape Verde Consulate to be authenticated. The PoA will then be sent back to your solicitor in Cape Verde.
The solicitor/Lawyer will carry out the following:
If the property is registered:
- ‘Land Charge Searches’ at the local Municipal Authority and Land Registry Offices - i.e. The solicitor/Lawyer will investigate the registry (documents relating to the property) to check whether any third party’s rights/obligations affect the ownership of the property: mortgages, charges, rights of way or any other restrictions.
- A "Certidao do Registo Predial" (which is the land registry certificate), "Planta de Localizacao" (which is the official map showing the property's exact location) and the "Certidao Matricial" (which is the tax information certificate) should be obtained.
If the property is not registered:
- a "Certidao negativa" (certificate confirming that the property in not registered in anyone's name) will be necessary and a "Certidao matricial para o efeito" (which is a tax certificate confirming this). It will then be possible to register the property.
- obtain a tax reference number for the purchaser.
-Final Deed of Conveyance (‘Escritura’)
-The Purchaser will be responsible for notifying the date and place for signature to the Vendor. The Title Deeds are prepared by the Public Notary (according to the Lawyer contract’s draft): Cape Verde does not have private notaries.
The Purchaser can nominate an Attorney/Procurator if he cannot be present at the proposed date in order to act on their behalf through a power of attorney.
To proceed, the following documents are required:
>Identification document (identification card or passport)
>Sale and Purchase Agreement
>Cadastral Register Certificate (issued by the City Council)
>Land Register Certificate (issued by the Land Registry)
>Presentation of taxpayer identification number
> The cost of the Deed is about 2% of the total value of the real estate.
-Conveyance Tax (IUP - Imposto Unico Sobre Rendimentos)
This tax is directly paid in the City Council in which the property is located and its value is 3% of the real estate price.
-The Conveyance Tax is compulsory and should be paid within 30 days after the conclusion of the Title Deeds. If the Purchaser is foreign and owns an emigrant savings account he will be free from the payment.
A copy of the Sale and Purchase Agreement will be required in order to proceed to this payment. >Real Estate Registration
The registration is not compulsory in Cape Verde, but it is advisable as it gives you more security. The registration is carried out by the Land Registry and costs approximately 2% of the total value of the real estate.
The required documents are: +Identification document (Identity card or passport)
+Certificate of the Deed of Sale and Purchase (issued by the Notarial Registry)
+A document confirming payment of Wealth Tax
-Insurance
The insurance is not compulsory but for security and peace of mind we would always recommend to our clients to insure their properties.
B) PURCHASE WITH BANK LOAN
The procedure is similar to the description above, except: -Bank Loan Solicitation
The choice of the Lending Institution is made by the Purchaser in the majority of the cases. The required documents are: >A Lenders Form delivered by the bank
>Sale and Purchase Agreement or a Promise of Sale Statement
>A copy of the identity card or passport of the interested person and of the spouse
>Remuneration Statement
>Last year’s Income Statement
Real Estate’s Registration Whenever the property has been purchased through a bank loan, registration of the property will be compulsory.
The registration is carried out by the Land Registry and costs vary from 2.5% and 3% depending on the interest rate and the duration of the loan. The required documents are: Identification document (Identity card or passport)
Certificate of the Deed of Sale and Purchase (issued by the Notarial Registry)
A document confirming payment of Wealth Tax
III) EXPENSES WITH A REAL ESTATE
a) LAND
The only expense attached to the land is Wealth Tax. This tax is annual and shall be paid in the City Council where the land is located.
Its cost is = (Cadastral Value / 20) X 3%
b) Capital Gains tax
CGT will payable on sale of your property. The tax varies depending on whether the property is:
- a plot of land for construction (taxable if the sales value exceeds a 100% of the initial purchase value),
- any other property (taxable if the sales value exceeds 30% of the initial purchase value).
Invariably, the added value will be taxed at a flat rate of 3%. The payment will be made within 30 days of issue of the Deeds and should be submitted together with a Capital Gains statement (‘Declaracao de mais valias’)
c) HOUSES AND APARTMENTS
If the real state is for personal use, Wealth Tax is applicable. This tax is annual and shall be paid to the Town Council where the property is located.
The value is = (Cadastral Value / 20) X 3%
If the real state is for commercial use or for any type of profit purpose, Wealth Tax is applicable as well as 20% of the profit received payable to the Public Finances.
The maintenance charges expenses will vary according to the providers’ services.
d) INHERITANCE/GIFT TAXES
Those are invariably taxed at a flat rate of 3% on the value of the estate or gift.
We recommend that anyone thinking of purchasing in the Cape Verde use a bilingual lawyer to check through all paperwork and make sure that everything is in order.
Please contact us for recommended lawyers.
