Investor's Guide - Fiscal System - Main Taxes in Portugal

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Fiscal System 

 

5. Municipal Property Tax ("IMI")

 

Municipal

Property Tax

Imposto Municipal sobre Imóveis (IMI)

Entry into Force

1 January 2003 (substituted the old Municipal Property Tax – Contribuição Autárquica)

Tax Rates

·       Rural properties: 0.8%; 

·       Urban properties: 0.3% to 0.45% 

·       Properties held by entities resident in blacklisted jurisdictions: 7.5%

Exemptions

·       Urban property used as a permanent place of residence

·       Property for touristic use

·       Urban property subject to rehabilitation

Payment

·       Amounts up to € 250 – 1 instalment in April; 

·       Amounts from € 250 to € 500 inclusive – 2 instalments in April and November; 

·       Amounts exceeding € 500 – 3 instalments in April, July and November.

 

5.1 Tax basis

 

Municipal Property Tax ("IMI")IMI is computed over the property tax value of urban and rural real estates located in the Portuguese territory. 

Property tax value is determined by the Portuguese Tax Authority based on the information given by the taxpayer and by the application of different ratios which depend on the type of the property, its localization, state of conservation and facilities. In last 10 years, urban properties were subject to a general review with effects on 31 December 2012.

 

Is due by the landlord, the usufructuary or the holder of the surface right of the real estate on 31 December of the year that it concerns.

 

5.2 Rates

  

Applicable rates are the following: 

·       Rural properties: 0.8%; 

·       Urban properties: 0.3% to 0.45%; 

·       Properties held by entities resident in blacklisted jurisdictions: 7.5%.

 

Each municipality determines, on an annual basis, the applicable IMI rate within the mentioned ranges. As from 2015, municipalities, by resolution of the municipal assembly, can fix a reduced rate to buildings for permanent residence of the owner, based on the number of dependents therein living. The reduction rate may be up to 20% in the case of one dependent, 40% in the case of two, and 70% in the case of three dependents.

 

The tax rates applicable on urban properties are triplicated when they are empty or tumbledown for more than one year.

 

5.3 Payment

 

IMI is paid in the following year that it concerns, in one, two or three instalments depending on the amount to be paid: 

·       Amounts up to € 250 – 1 instalment in April; 

·       Amounts from € 250 to € 500 inclusive – 2 instalments in April and November; 

·       Amounts exceeding € 500 – 3 instalments in April, July and November.

 

5.4 Exemptions 

 

There is a list of exemptions that includes, amongst others:

   
5.4.1 Urban property used as a permanent place of residence (owned or rented)

    

This exemption should be requested within 60 days from the end of six months deadline following the acquisition of the property or its construction or renovation. Applies to individuals which obtained a taxable income, in the year prior to the acquisition/construction, lower than € 153,300. Is valid for three years and is applicable to urban properties with a property tax value lower than € 125,000. This exemption is not applicable when taxpayer is resident in a tax heaven (listed by the Portuguese tax authorities). It can only be granted twice per taxpayer or family unit.

   
5.4.2 Property for touristic use

 

When a touristic use has been granted to a real estate touristic unit, an exemption for seven years may be granted under certain conditions. The exemption must be requested within 60 days as of the publication of the dispatch which approves the touristic use of the unit.

   
5.4.3 Urban property subject to rehabilitation

 

An IMI exemption is applicable for a period of two years as of the issuance of the license by the municipality authorizing the rehabilitation. Rehabilitation should be certified by the municipality by the end of the works (or by the Residence and Urban Rehabilitation Institute, when applicable). Such municipality must communicate to the respective local service the exemption within 60 days. In the following 15 days, the local tax service must cancel previous tax assessments and refund IMI eventually paid.

 

An additional IMI exemption is foreseen for properties subject to rehabilitation when located in special urban rehabilitation zones or respect to leased urban properties subject to the phase-in rents updated under the new Urban Lease Law. Such exemption may be granted for a period of five years (including the year of conclusion of the rehabilitation), which may be renewed for an additional period of five years. They only apply to properties subject to rehabilitation after 1 January 2008 and completed until 31 December 2020. The beginning and the conclusion of the construction works must be certificated by the municipality. The exemption and relevant conditions are approved by the municipal assembly.

 

 

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