Property tax up 6.75% on housing and 9% on services, trade and industry
Portugal’s municipal property tax IMI is to increase by 6.75% next year on apartment buildings that are subject to Tax on Patrimony (Valor Patrimonial Tributário – VPT) charged by the tax authorities, while the property tax on offices and industrial premises will go up 9% on those buildings that are subject to automatic updating.
This is according to a regulation published on Thursday in the Republic circular Diário da República which publishes updates on the coefficients on the devaluation of the currency in line with inflation. Landlord associations are calling for an equal break on taxes for properties for rent to offset the increase.
This year the increase in taxes was only 0.75% on housing and 1% on premises used for services, trade and industry, in a review that is carried out every three years. Now the bill has shot up to 6.75 and 9% respectively because of inflation.
At a time with high interest rates on mortgages, which have increased monthly mortgage repayments to banks, this tax hike will be yet another burden on the budgets of families that have mortgage contracts.
For example, in the case of housing, if the owner currently pays €500 in IMI per year, the bill will rise by 6.75% to €533.75.
In the case of a building that is used for services, trade or industry (in other words an office or industrial premises) the increase will be 9%, so the tax on a yearly levy of €2,000 will increase €180 to €2,180.
However, the tax hike will only affect buildings whose VPT tax is subject to an evaluation in 2023 through the three-monthly automatic update according to ECO online news which spoke to Ricardo Reis, a tax consultant for Deloitte.
This means that those business premises that last were evaluated in 2020 will now have to fork out the higher rate.
“Regardless of whether the property owner asks for an update in VPT taking inflation into account, the tax authorities review them every three years.
It means that both buildings used for housing, and as urban commercial, services and industrial premises that were last evaluated in 2020 will now face increased taxes”, said the tax expert.