notion

My Portuguese accountant tells me that you now have to submit a contract for all rentals. And, that contracts must be for at least 30 days and that anything less is considered a business!
I've been happily (?) paying my 15% on my holiday rental for about 5 years so this is a bit of a bombshell.
Whilst there are advantages of running an FHL as a business in Portugal (claim wider range of expenses). It is expensive to set up and run.

Has anyone else come across this, if so, what have you done?
Has anyone spoken to the Portuguese accountant recently and been told that there are no changes?

Thanks everyone

Chas061

Think your accountant is maybe misinterpreting what you're doing. He seems to be looking at these lets as longer term

Holiday lets whether you're a Resident or Non Resident reguire a AL Licence which specifically covers holidays lets, B&B and small occupancy hotels/Residencias.

Resident and Non Residents should be registered with Financas as Self Employed under the Simplified Regime (unless you have other earnings in PT that might alter your situation), which gives a set percentage of "profit" that may or may not be taxable depending on your circumstances.

Residents and Non Residents should also be registered with Social Security, Residents and Non Residents who are of official retirement age do not pay Social Security contributions but must apply for exemption
Non Residents who pay Social Security/NI in another EU country do not pay Social Security contributions but must apply for exemption

Realme

We are just about to let our house for holiday rentals. We are applying for the Alojamento Local and have been told by Loule camara we need a ficha technica for fire risks done by an architect or engineer. this is for a small holiday home for up four people. has anyone done this and what are the costs? We also have to have an energy certificate which costs us 240 euros...it's all getting a bit expensive!

notion

Hi Realme, this is a thread about tax. Unless that is what someone is interested in then they won't see your question. Your best to start a new thread.

Chas061

You don't need an energy certificate for holiday rentals but do for residential letting, you also don't need a fire certificate for under 50 person occupancy, Loule not using regulations correctly but yes repost

A & M

This is exactly what we have done, on the advice of our excellent accountant. The simplified taxation regime assumes that your taxable profits are only 20% of your turnover. If your personal tax rate is 25%, that means you only pay a net effective tax rate of 5% of turnover. The alternative is to submit full details of your qualifying expenses; worthwhile only if they exceed 80% of turnover.

You will need to take advice about registration for IVA (i.e. VAT), compulsory over (I think) 10,000 Eur. The advantage, though, is that while you are liable for 6% IVA, you can reclaim IVA at 23% on a lot of your expenditure.

Now here's another issue - according to an article we read in a local English language magazine, the tax under this regime is "final" according to the UK /Portugal double taxation treaty, so a non-Portuguese resident and UK taxpayer would not have to pay tax on it in the UK. (As opposed to declaring it to tax in the UK and receiving a credit for the Portuguese tax paid). I have to say that that isn't the way I read the double taxation treaty, but I'm not an accountant - does anyone have any practical experience of this?

notion

Thanks both,
That is certainly a new one on me and very intersting. As far as double taxation goes, I've not heard anything about "final" in this respect but it is certainly something I will check with HMRC. Do you remember the name of the magazine?

A & M

It was the East Algarve magazine, can't remember which issue but some time in the last 6 - 8 months or so.

isdoo

As someone who rents, I have yet to find a single landlord that is registered anywhere - probably not even paying tax in their home country.

Looks like many avoid the law......

Just wish there was a way to report dodgy landlords who possibly also put tenants at risk.

I know one that we walked away from who I would love to report as I know that others will get ripped off.

TonyJ1

The rules for the 2014 are even more favorable. 20% will become 15%-

TonyJ1

I think you need an accountant who knows what he is doing.

TonyJ1

From my experience, the municipality is consistent with the other municipalities as as to fire and safety issues. They are also relevant from an insurance viewpoint. As to the energy certificate, in my interpretation of the law, if you are starting a short letting business, or placing the house on the market either for rental or sale, it will also be required. Some municipalities are also requesting these certificates for ongoing licensed lets, but in this case they are overreaching the law.

charlton1969

We got our AL letting licence for our apartment in Burgau from vila do bispo camara in 2011 and we had to have a fire and risk assessment done as well as a energy certificate. We used a solicitor to get it all done and for everything it cost around 700 euros. It lasts for 4 years so hopefully when it needs renewing it will just be a case of going to the camara and paying the renewal fee.

notion

Well, I have just spoken to my accountant and she says that I am supposed to:
- get a declaration from UK tax authorities confirming that i pay social security in the uK
- visit local Financias with her to declare that I am running a 'business' in Portugal. Apparently it is a business because it isn't longer term rentals.
- Also I would be liable for IVA at 23% (payable monthly) as it earns more than €10k pa

Second opinion required! (thanks for the recommendations already received by PM)

TonyJ1

I don´t know about the social security. Certainly if you are a pensioner, then there would be no social security contributions. Anyway, the Vat on hotel accomodation (Alojamento Local is seen as a ´mini´hotel business) is 6% instead of 23%