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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.
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.