The question arises at the beginning of practically every large-scale real estate transaction. The answer, however, is rarely generic — and the structure adopted ends up shaping everything that follows, from price to due diligence, from assumed risks to contractual architecture.
Two paths, two universes
In an asset deal, the buyer acquires the property directly from its owner. The transaction is a classic real estate purchase and sale, governed by contract law and the registration and tax legislation applicable to property transfers.
In a share deal, the buyer acquires the company that holds the property. The underlying asset remains the same, but the object of the transaction is different — it becomes equity interests. As a result, the tax regime, risk profile and, frequently, the complexity of due diligence all change.
The tax factor
In many projects, this is the starting point of the decision. An asset deal is, as a rule, subject to IMT (Property Transfer Tax), Stamp Duty and, in certain cases, VAT. A share deal can be more tax-efficient — particularly in situations where the transfer of shares does not trigger IMT — but it requires careful analysis of the anti-avoidance rules applicable to companies whose assets are predominantly real estate. The right question is not “which pays less”, but “what is the effective tax burden of the transaction and of the future divestment”.
The risk factor
Here, the asset deal works in the buyer’s favour. The property is acquired free from the liabilities of the selling company. In a share deal, the buyer inherits the company’s full history — tax, employment, contractual, and litigation. Hence the importance of an in-depth corporate due diligence and a robust package of representations, warranties and indemnities in the SPA, frequently complemented by price retention mechanisms, escrow or W&I insurance.
Other practical criteria
- Existence of lease, financing, management or operating agreements to be preserved — generally favours the share deal.
- Change of control clauses in relevant contracts — may affect the viability of the share deal.
- Existence of tax benefits or non-transferable licences associated with the company — weigh in favour of the share deal.
- Need for bank financing and the respective guarantees — the collateral structure is simpler in an asset deal.
- Seller profile (private vs. institutional) and willingness to provide reps & warranties — influences the negotiating balance.
A simple rule
The structure follows the project, not the other way around. Asset and share deals are not equivalent alternatives to be chosen out of habit — they are legal frameworks with distinct consequences, which must be assessed based on the investor’s objectives, the asset’s profile and the transaction’s time horizon.
IMOLEGAL structures and supports real estate transactions in Portugal, under both configurations, on behalf of domestic and international investors. To discuss a specific transaction, contact our team.