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Tax receipts from Local Lodging (“AL”) grew from €69,000,000 to €123,000,000 between 2015 and 2017, as revealed by the Secretary of State for Tourism, Ana Mendes Godinho. “AL” license registrations also increased almost twofold from 28,000 to over 50,000 over the same period.
The creation of a Porto Municipal Tourist Tax, which might reach two euros per night, is designed to solve housing problems and omits improvements in the tourism sector, claims the Hospitality Association of Portugal. The City Council explained, “the proceeds of this levy are to be applied in projects aimed at promoting housing for the middle and lower middle class in the historic centre to accelerate the repopulation and curb pressures from real estate development.
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.
In line with Berlin, Iceland wants to restrict tourist letting. New legislation is being introduced that will limit to 90 days per year the allowable offerings to holidaymakers. If this period is exceeded, a additional tax will be applied.