Monthly Archives: October 2019

Local Lodging: Lisbon can accommodate 102,000 holidaymakers

31 Thursday Oct 2019

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As compared to hotels, “AL” already has twice the capacity to receive tourists in Lisbon. In the nation’s capital which has 500,000 inhabitants, Local Lodging can accommodate 102,000 holidaymakers. In March 2019, there were 18,000 “AL” units in the municipality of Lisbon, an increase of around 80% from 2008, maintaining the trend of accelerated growth of previous years. Of the 18,000 accommodations, 90% are short-term holiday let apartments (notably commercialised through Airbnb), with 9% being hostels, while hotels can accommodate less than 50,000 travellers. Since 2001, the data reveals that Lisbon has been losing inhabitants while tourist demand has been steadily increasing. In 2011, the city received 2.9 million guests. By 2017, demand almost doubled to 5.2 million (+ 83%), which represents a nearly quarter of the total holidaymaker demand received nationwide.

Hybrid lets

31 Thursday Oct 2019

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Question: I have a local lodging unit that I have only been able to let during the high season. Now I have a potential tenant who wishes to rent the apartment for this eight-month period, from October to May. Can I do this by concluding a contract for the period and then move forward with weekly and biweekly lets in the summer?

Yes, such a hybrid solution is possible. You will need to make a rental contract, defining the duration of the agreement as well as delimit other conditions. In essence, this arrangement is compatible with your proposed summer “AL” activity. However, you will not be able to deduct expenses as you would with a conventional long-term lease.

Cost of long-term rentals continues to rise nationwide

31 Thursday Oct 2019

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In the first six months of 2019, new lease agreements were 9.2% more expensive as compared to the same period last year. The price per square metre went from €4.80 to €5.00 in the first semester. At the same time, fewer families were able to find long-term rental accommodation. Data published by the National Institute of Statistics (INE) reveal that the number of new contracts fell by 10.5%.

The super rich of Portugal

31 Thursday Oct 2019

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Portugal has 930 taxpayers with high income (>€5m) and wealth (>€25m). In 2017, the tax authorities (“AT”) could detect only 309 of these high net worth individuals who accounted for very little of the taxes collected (0.5%). The others remained undetected and paid nothing.

High-value business activities given streamlined application

31 Thursday Oct 2019

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Foreign residents applying for Non-Habitual Resident status with high-value-added business activities (“VTA”) may now receive prompt approval for a flat-rate tax of 20% on earned income in income categories A or B (salaries and sole trader income). Under previous practice, “VTA” approval was individualised and could take a year or more for consideration. Nevertheless, taxpayers must still be prepared to provide proof of their qualifications and effective exercise of the business activity upon request from the tax authorities (“AT”) at any time during the “NHR” 10-year period. These new procedures came into effect for applications made after 26 June 2019. This streamlined application follows other “Simplex” actions launched earlier this year. For example, the Portuguese Tax Authority (“AT”) overhauled the list of qualifying Non-Habitual Residency professions (“VTA”) eligible for the 20% flat-rate tax that were initially put in place in 2009.

Foreign student enrollment has quadrupled in a decade

31 Thursday Oct 2019

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In 2019, 50,000 foreign students have officially registered in universities and polytechnic institutes in Portugal. Over the past four years, the number of international students has increased by 48%, as a result of the validation of the international student status in 2014 along with the growth Study and Research Programmes available in Portugal. Currently, foreign nationals represent 13% of all students in Portuguese higher education. This increase contribute in foreign enrolment contributes to the rental housing pressures through out the country.

Consequences of hiding assets or income from the tax authorities (“AT”)

31 Thursday Oct 2019

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As a rule, intentional omissions or inaccuracies in fiscal declarations or other tax relevant documents are punishable by a fine of between €375 and €22,500 for individuals or €750 and €45,000 for companies. Also, these infractions are punishable as the crime of tax evasion if the outstanding assessment is €15,000 or more per declaration. Tax fraud is punishable by imprisonment of up to three years. In more egregious situations, the crime of qualified tax fraud is punishable by imprisonment of two to eight years for individuals and a penalty of 480 to 1920 days for company directors.

The 2019 Affordable Rental Programme

14 Monday Oct 2019

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The Affordable Rental Programme has been launched to enhance the supply of long-term residential housing at controlled prices. The initiative targets accommodations for individuals and middle-income families who now have difficulty in finding affordable flats, taking into account the inflated prices currently being practised in the marketplace. The premise is to create a win-win situation for all parties. Tenants should be able to find suitable housing at lower prices. Landlords can advantage of the new tax breaks that have been created for the new rental income they receive. Continue reading →

NHR: Changes in value-added professions

14 Monday Oct 2019

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Beginning in January of 2020, a modified catalogue of business activities comes into force, benefiting a favourable tax regime aimed at attracting professionals with diverse skills to Portugal. These occupational profiles are now extended in light of the difficulties experienced by employers in various sectors in hiring workers since the inception of the Non-Habitual Residency Regime 10 years ago. Continue reading →