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Finanças investigating property rental income

apartmentsAs promised at the last Troika review, Portugal’s government is now full steam ahead in its effort to clamp down on undeclared rental income.

The Ministry of Finance said that 2014 is the year it is going to intensify inspections in the real estate rentals sector to combat the "many situations" of fiscal irregularity under its general clean up of fraud and the black economy.

The European Commission report on the tenth review of the financial adjustment programme expressly stated that the Portuguese Government has committed to conducting a survey of undeclared income from property rentals.

In the report, Brussels indicated that the study should be completed by the 12th and last Troika review which is schedueld for early this summer.

Finanças have more than 400,000 suspect properties where tax evasion is estimated to be costing €300 million a year.

The Ministry of Finance said it has detected "numerous situations that indicate omission of facts and undeclared income," following which the Tax and Customs Authority, through its Directorate of Fraud Investigations, has now been instructed to crack down on evasion in the rented homes market, especially tourist rentals.

The Ministry commented that "the activity of the Tax Inspection Authority will be boosted with more inspectors, and more legal and technological resources to control, detect, correct and punish offenders in this economic sector."

Inspections will be made by sending inspection teams into the field with a main target of properties let to tourists and students. This illegal rentals market sector is estimated to turn over about a €1 billion in revenue.

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Comments  

-3 #9 Gordon Putter 2014-04-15 16:23
Ms Williams point needs further comment as it confuses many newly arriving Brits.
EU law - as the Finns often say - is only about being legal .... OR criminal. It never specifies a 3rd way.
In the UK there is legal tourism or criminals offering tourism illegally who can be / will be punished. No 3rd way.
Here in Portugal, as in so many less developed societies in the EU there is a 3rd way not open to Brits .... making a donation and becoming a 'friend of the Municipal'. No chance then of being punished so why bother going legal ?
(If Financas come sniffing you get a Municipal temporary alojamento permit. Revoked when Financas go after someone else. Your Financas file then marked as 'Under municipal protection')
+2 #8 Mike Towl 2014-04-15 13:38
In reply to RCK. A brave admission Sir, but worry ye not. Being a retired tax consultant doesn't necessarily make you a bad person.
0 #7 Susan Williams 2014-04-15 10:16
What is striking Ms P .... is when you ask on Brit. expat websites for ANYONE who is running a legit. licensed etc tourism business to help and advise.
NO-ONE REPLIES !!!
The Portuguese advising Brit. incomers do not want the 'Effective Occupation' so keep their heads down. No Brit puts their head up, as most have failed and are already back in the UK.
Is this really what Portugal wants the EU for ... economic stagnation ?
Odd ....or what ?
-1 #6 Paul 2014-04-15 10:08
Quoting Ana Pereira:
Great! People who pay IRS have to make up for country debts while foreign second home owners make their own laws walking away with thousands a year. Put some fines to it also!

Plus thousands of Portuguese owners, direct or through companies, especially in university cities. This is not just a foreigners game. Even though the expense of being legit is high if the property is owned by a company, the tax rate can be low.
+3 #5 RCK 2014-04-15 10:02
Quoting Mike Towl:
There is some merit in what Ana Pereira says, however, I can assure her foreign owners would be more amenable to "Going legit" if the punative 1950's rules and regulations along with the ludicrous fees charged by the local authorities for being legitimate were more reasonable. It's all about competition and value for money dear. Still dirty words in Portugal.

Much as I sympathise with Mike's comments, foreign owners who let out their Portuguese property but are not Portuguese tax compliant are now playing a very dangerous game. If you have a website/advertise on the web, you are inviting trouble. Get caught, which is increasingly likely, and you will be sorry. The costs of back taxes & VAT, penalties, interest, & prof
fees to sort the mess out, could be horrendous and possibly result in property confiscation. UK tax authorities would also most likely become involved. The warning signs are there. Incidentally, I am a retired Tax Consultant
+5 #4 Peter Booker 2014-04-15 09:09
But by buying a property in Portugal, surely a foreigner accepts the rules of the country, including the tax laws? These people are avoiding legitimate tax, and I suspect that their original investment was made with that aim. It is disingenuous to pretend that the only issue which prevents them acting in a legitimate fashion concerns local council bylaws.
+4 #3 Mike Towl 2014-04-15 08:40
There is some merit in what Ana Pereira says, however, I can assure her foreign owners would be more amenable to "Going legit" if the punative 1950's rules and regulations along with the ludicrous fees charged by the local authorities for being legitimate were more reasonable. It's all about competition and value for money dear. Still dirty words in Portugal.
+2 #2 mm 2014-04-15 07:44
and also don't forget all the portuguese who rent out rooms, apartments, villas to holiday makers etc
+9 #1 Ana Pereira 2014-04-14 21:46
Great! People who pay IRS have to make up for country debts while foreign second home owners make their own laws walking away with thousands a year. Put some fines to it also!

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