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Local Lodging owners may pay greater condo charges

The Government is studying a new requirement for Local Lodging that would mandate higher condominium levies for owners who engage in holiday lets. If adopted, it would collide with another bill where the condominiums would be given the power to authorise, on a case-by-case basis, the possibility of owners renting short-term to tourists. The latter proposal was made in absentia and without the governmental consent.

Local Lodging owners may pay greater condo charges

The Government is studying a new requirement for Local Lodging that would mandate higher condominium levies for owners who engage in holiday lets. If adopted, it would collide with another bill where the condominiums would be given the power to authorise, on a case-by-case basis, the possibility of owners renting short-term to tourists. The latter proposal was made in absentia and without the governmental consent.

Moves on the tax front…

Apart from the increase in Tax on Local Lodging (from net 3,75% to net 8.75%) the State is planning indirect taxes and changes for 2017.

An added assessment, dubbed “Additional Municipal Property Tax (AIMI), will cover the entire ratable value (VPT) with an exemption on the first €600,000. For properties above this evaluation, the rate of 0.3% will apply. Property Owners with outstanding taxes will forfeit this exemption and will have to pay the new levy whatever the VPT.

On the other hand, owners of buildings with ratable values over one million euros should pay less overall tax in 2017 than last year, even with the proposed increase in Municipal Property Tax (IMI), due to the elimination of the 1% Stamp Duty on this type of luxury real estate.

Tax Hike on Local Lodging

In the 2017 Portuguese State Budget there will indeed be a change to the tax on Local Lodging. After heated discussions on Thursday evening, it seems that the Government is not going to increase the overall tax rate to 28%.

Instead, the taxable part of the income will increase from 15% to 35%. This means that the current tax rate of net 3.75% will go up to net 8,75% .

An example:  A Local Lodging owner has an income of 100€.

Until 31.12.2016, a tax rate of 25% is applied to 15% of the 100€,

so 15€ are taxable. On this amount,  the tax rate is 25%.

The result: of 100€ income: he pays 3.75€ to the state.

 

As of January 2017, a tax rate of 25% is applied to 35% of the 100€,

so 35€ are taxable. On this amount,  the tax rate is 25%.

The result: of 100€ income: he pays 8.75€ to the state.

 

Government back-peddles on IRS Reform

NALLE logo-red 30%The government has abandoned many of the proposed IRS reforms to the 2015 Budget in hopes of achieving a consensus with the opposition Socialist Party. With recent successive alterations, it would appear that only the final Budget vote will clarify which changes survive.

IMT to be repealed in 2016

NALLE logo-red 30%Proposed repeal of “IMT” in January 2016

The Government will end Municipal Property Transfer Tax (IMT) in January 2016, tax paid when buying a home. In their memorandum, the ‘troika’ had already suggested the transfer of IMT tax revenues to Municipal Property Tax (IMI).

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