Letting a bedroom in a private home in Greater Lisbon now costs on average €308 per month – the most expensive in the country – with growth in prices of 14% in 2017. Interest in room rentals, a traditional form of housing for university students and young workers, has quintupled the number of searches carried out over the past year. Due to increased demand, the cost of letting an individual room has risen to an average of €238 per month in Portugal.
The Left Block, a partner in the governing coalition, proposes changes to current Local Lodging legislation. Under the soon-to-be recommended plan, holiday letting not exceeding 90 days per year should continue to benefit from the current tax regime. Year-round operation – without a limit of days and designated as “tourist accommodation” (Habitação turística) – must be equated with a hotel activity and assessed on the same basis.
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.
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.
Lisbon has experienced the greatest decline in the number of young adults within Portugal in recent years. One factor contributing to the drop is the difficulty in finding affordable housing. In 2012, the median rent in Lisbon was €268, according to INE (“Instituto Nacional de Estadística”). In 2016, the average climbed to €830.
But high rent is only part of the problem. The ageing of the population is at the root of the decrease. In 1991, Lisbon had 138 seniors for every 100 young people (from 0 to 14 years old). By 2016, the number of elderly rose to 182, a proportional increase of 24%, making Lisbon the oldest council in the nation. Provisional population estimates advanced by INE indicate that the number of young people aged between 20 and 34 living in Lisbon went down from 95,830 in 2011 to 67,916 in 2016, a net loss of 29%.
Beyond an unequivocal stance on climate change, the recent G20 summit also devoted significant attention to the issue of “tax transparency”. The US is currently the only major financial centre not to sign up to the Common Reporting Standard (CRS). The G20 communiqué threatens sanctions against countries not meeting the agreed international standards which include the full adoption of CRS.
Will the US give up its opaque stance (“Tax Haven USA”)? Will the OECD and the EU have the courage to blacklist the US if it fails to adopt CRS before 2018? The EU is now actively promoting the CRS as the standard it expects the US – and the rest of the world – to meet. We will watch with interest the EU blacklisting harmonisation process in the coming months.
Government is studying a basic levy to Non-Habitual Resident pensions with possible introduction in the 2018 State Budget. According to the Jornal de Negócios, the step under consideration is applying a potential tax rate of 5-10%. Currently, NHR beneficiaries enjoy a 10-year tax holiday. The contemplated measure is said to be in the name of “good fiscal relations” with other European countries.
Between 2012 and July 2017, just eight Golden Visas, out of a universe of 5,243, were granted based on the creation of job positions in Portugal. The vast majority of investors (4,945) choose to buy homes costing more than €500,000 in order to qualify for permanent residency programme.
Individuals who reside in tax havens and own residential property in Portugal are free from paying the 7.5% surcharge applied to the new Additional Municipal Property Tax (“AIMI”). Only companies domiciled in tax havens – offshore companies – are subject to the aggravated rate on the full ratable value (“VPT”) of residential properties. “AIMI” replaces Stamp Tax, which provided for the application of a tax rate of 1% on each property with a “VPT” greater than one million euros.
The Immigration and Borders Services (“SEF”) will not be able to process new applications until November according to APEMIP (Associação dos Professionais e Empresas de Mediação Imobiliária de Portugal). “SEF” continues understaffed and overwhelmed with the backlog of existing requests.
The Immigration and Borders Service will authorise Golden Visa applicants wishing to make property investments in the Greater Lisbon region to submit their applications to offices outside the capital area as is currently required. The decentralisation move intends to reduce the current growing backlog of submissions.