New law on tourism rentals
A new law on tourism rentals makes it mandatory for any individual letting property to register with the Tax Department as a business activity. The law comes into effect on 27th November and also demands that all persons letting property for short term tourism register with their local council for Alojamento Local (“AL”).
AL registration has been in place for some time but the new law alters the procedure for registration and includes the necessity to produce proof of the registration of a business activity by production of an “inicio de actividade” form submitted to the tax department.
For those persons already registered under AL with their local council, there is now the obligation to produce an “inicio de actividade” form as submitted to the tax department within 30 days of the date the law comes into force.
The change in reporting letting income created by the new law will mean a substantial reduction in tax payable on the income received. The calculation of tax will be on the basis of turnover. The “Simplified Tax Regime” will apply meaning the tax payable will be based on a fixed amount of profit equal to 15% of the rental income. A flat tax rate of 25% will apply to that 15% profit which will determine a final tax rate of 3.75%.
This procedure does however require a disciplined and ongoing relationship between the property owner (or the property agent), and the reporting party (probably a fiscal representative?). Due to the nature of the new requirements the tax will be at a minimum but annual accounting fees will have to be paid.
Sovereign – Consultoria Lda (“SOVEREIGN”) with its staff of 14 including 4 qualified accountants working under the guidance of Finance Director, Joaquim Fava, is capable of providing full assistance in this process for an annual fee of 1,200 euros (plus vat @ 23%). This fee will cover the following services:
- Fiscal Representation;
- Tax Return preparation and filing;
- Online invoicing and monthly reports compliance;
- Accounts & book keeping;
- Reminders re monthly rental returns;
In addition a once only fee of 180 euros (plus vat @ 23%) is payable in respect of initial registration of business activity with the tax department.
Overall you will pay less!
Registration needs to be effected before the end of 2014 and thus we recommend that any person who may need assistance makes contact with SOVEREIGN as soon as possible in order to proceed.
For more information please contact:
Sovereign - Consultoria Lda
Parque Empresarial Algarve
Tel: +351 282 340480
Fax: +351 282 342259
Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, this information does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.