# Municipal Tax Portugal



## AuMargaret (Feb 3, 2015)

Just thought anyone planning on buying a property in Portugal should know this.

I purchased my property on 24 October 2014. I have just learned that I have to pay Municipal Tax (council rates) for the whole of 2014 - totally unfair!
The law states that whoever owns the property as at 31 Dec has to pay for that whole year. 
In UK and Aust the council tax(rates) are proportioned out fairly at the time of exchange.


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## travelling-man (Jun 17, 2011)

Your lawyer should have made you aware of these things and should also have made you aware that (assuming you're a new immigrant) you'd probably be eligible for a rates holiday of something like 4 or 5 years. - In our case, we were given a 4 year rates holiday.


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## In 2 bikes (Apr 18, 2013)

I think the exemption may vary in terms of years. I seem to recall it's 2 years now, which is all we got. Sadly most of that was retrospective too so in real terms we probably only got 16 months. 

You have to apply for it. I don't think it's an automatic assumption that you are new to the country and automatically receive it. 

Also, either we were incorrectly pinged for IMI or there is a separate situation for 'out-buildings', but we received a premature bill for IMI for our detached garage albeit 13 euros.


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## travelling-man (Jun 17, 2011)

I agree the duration of exemption seems to vary........ in our case, our lawyer came to help us register and made sure they knew we were new immigrants and they immediately volunteered the fact we were entitled to (in our case) a 4 year holiday....... and that was 3 1/2 years ago.


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## BodgieMcBodge (Mar 8, 2013)

That is not unfair, they have not just invented the rule for you nor hidden the information. If you + your Lawyer cannot be bothered to find out the full costs of you owning property in Portugal then that is your / their fault. It can easily be included in the promissory " seller gives a contribution of XX euro for part year IMI "


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## RichardHenshall (Jul 26, 2009)

AuMargaret said:


> Just thought anyone planning on buying a property in Portugal should know this.
> 
> I purchased my property on 24 October 2014. I have just learned that I have to pay Municipal Tax (council rates) for the whole of 2014 - totally unfair!
> The law states that whoever owns the property as at 31 Dec has to pay for that whole year.
> In UK and Aust the council tax(rates) are proportioned out fairly at the time of exchange.


I assume you are now aware that the first (or only) instalment is due by the end of April?

At least, now that you know about this unfair allocation of charges, you can apportion costs with whoever you sell to in the future, so they don't get caught like you did. 

In my part of the UK, rates (not council tax) are also charged to the owner of the property at the relevant date (1st April) each year.

The difference is that Portugal charges _in arrears_ for services that the owner might not have received while in the UK I'm paying _in advance_ for services I haven't yet received. Either way the balancing adjustment comes when you sell.


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## Maggy Crawford (Sep 18, 2010)

We came here in August 2007 and went to Financas with our solicitor who filed for the exemption. We were initially granted five years because (1) we were going to be permanent residents and (2) we moved in within six months of finalising the transaction. This exemption period was later extended to eight years. I have a feeling this exemption has now been abolished but am not sure.


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## travelling-man (Jun 17, 2011)

Maggy

First of all, welcome back and hope you had a great time. 

A friend of mine bought a house in Pedrogao Grande last year and was initially offered the exemption - but the offer was withdrawn when he told them it was a holiday home not a permanent home but I get an idea it varies from area to area.


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## RichardHenshall (Jul 26, 2009)

It _shouldn't_ ever apply to a holiday home by definition. For the same reason it can never apply to an owner who is correctly registered as non-resident.



> *Isenção para habitação própria permanente (n.º 1 do art. 46.º do EBF)*
> 
> Quais os prédios que podem beneficiar desta isenção?
> 
> Os prédios ou parte de prédios urbanos construídos ou adquiridos a título oneroso *para habitação própria e permanente do sujeito passivo* ou do seu agregado familiar e que sejam afectos a esse fim no prazo de seis meses pelo sujeito passivo.





Google Translate said:


> *Exemption for permanent residence (paragraph 1 of art. 46 of the EBF)*
> 
> Which buildings eligible for this exemption?
> 
> The buildings or parts of urban buildings built or acquired for consideration *for permanent residence of the taxpayer* or of your household and are allocated to this end within six months by the taxpayer.


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## travelling-man (Jun 17, 2011)

Richard:

Sorry...... I didn't make myself clear. 

I meant it seems to vary from area to area if a new resident gets the exemption and/or for how long it lasts. 

I didn't mean it varies from area to area if a holiday home owner or non resident gets it.


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## RichardHenshall (Jul 26, 2009)

Again, I think it _shouldn't_ vary but since it's also dependent on the VPT, that maybe why obtaining exemption seems a little random (like the VPT does!):



> *Qual a duração da isenção?*
> 
> O período de isenção a conceder depende do valor patrimonial do prédio, conforme a tabela do n.º 5 do art. 46.º do EBF (ver abaixo).
> 
> ...


I seem to recall mentions that this exemption had been withdrawn or restricted so this may or may not be current, though it _should _be current.

https://www.portaldasfinancas.gov.pt/de/ajuda/DGCI/FAQEntregISIMI.htm


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## grammymissy (Jun 21, 2009)

We were told that our recent primary home purchase entitles us to three years exemption


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## In 2 bikes (Apr 18, 2013)

It is confusing but even in the worst case scenario I'm sure I.M.I. is a drop in the ocean compared to the U.K. version.

I was paying £160 a month for a two bed bungalow in Merseyside. Now I'm likely to pay 130 euros a year. I'm happy to pay it, especially considering how the local public services are infinitely better here.

We all, will always, have to pay taxes but I'm for ever amazed at the good ol' V.F.M. My car tax is £23 a year here and there a no pot holes. My 4x4 tax is £36 ish a year compared to £400 odd quid in the U.K. for the same kind of truck. Diesel is so much cheaper and food is so much better.

In short, it is what it is, and it's worth it !


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## Maggy Crawford (Sep 18, 2010)

I totally agree about the comparison with UK. Our council tax would probably now be about £200 per month, here we are likely to start paying €350 per annum in arrears. Car tax is €35. No TV licence as such (although we did invest in a 2.3 m dish last year). Half price train fares which we use and other concessions for over 65s. Our local conservation zoo in UK charges about £20 for adults and £18 for OAPs. I know where we are much better off.


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## TonyJ1 (May 20, 2014)

travelling-man said:


> Richard:
> 
> Sorry...... I didn't make myself clear.
> 
> ...


The legislation is clear as to period of exemption, when it should be requested, the consequences of late application, maximum value for which exemption is available, etc. location of where property is purchased does not come into it.


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## travelling-man (Jun 17, 2011)

Tony

Please don't think I'm doubting your word because I'm not but if that is the case, can you tell us what those are please because we've seen here that some people seem to be getting different exemptions to others?


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## RichardHenshall (Jul 26, 2009)

See my posts #9 & #11 of this thread.

The different exemption periods that others have referred to would seem to be well into the past (when the exemptions were more generous) and are therefore irrelevant to the current situation.


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## TonyJ1 (May 20, 2014)

For numerous reasons:

1. Ignorance - exemption not requested 
2. The law has changed over the years - these exemptions / tax holiday almost wiped due to 'crise'
3. Tax holiday not requested timeously. If requested more than sixty days after purchase, the tax holiday period is reduced
4.There are limitations in that the tax holidays are based on the rateable value of the property on which exemptions maybe claimed. The rateable value does not necessarily bear any resemblance to actual cost of property.
There are probably other reasons which I cannot think of offhand


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## travelling-man (Jun 17, 2011)

We didn't know about the tax holiday when we bought and our lawyer told us about it and got it for us on the day we signed & bought the house (in June 2012)....... and we were given 4 years off....... was that correct or should we have been given longer/shorter?


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## TonyJ1 (May 20, 2014)

I am not sure, but it sounds about right. If your lawyer put in the application timeously, then it would have been granted according to the law ruling then. As the holidays do differ according to the legislation as ruling then, and the rateable value of the property - it would be a question of checking.


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## travelling-man (Jun 17, 2011)

Gotta love bureaucracy huh!


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## AuMargaret (Feb 3, 2015)

travelling-man said:


> Your lawyer should have made you aware of these things and should also have made you aware that (assuming you're a new immigrant) you'd probably be eligible for a rates holiday of something like 4 or 5 years. - In our case, we were given a 4 year rates holiday.


Yes I am a new immigrant (retiree). The lawyer did not advise me so now I have to somehow find the way to apply for it myself.


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## travelling-man (Jun 17, 2011)

I'd suggest you go back to your lawyer, kick his or her arse and make them do it for you........ as they should have done in the first place.


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## grammymissy (Jun 21, 2009)

We have been told also, that exemption is now limited to those who will be filing income taxes, tax residents in Portugal. If not your primary tax residence, exemption is denied.


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## TonyJ1 (May 20, 2014)

As far as I am aware, it has always been case that the exemption / tax holiday was for primary residence only. Many exemptions were requested fraudently and the tax machine did not have the adequate resources to stop this. Matters have much improved (depends on which point of view) on this.


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## grammymissy (Jun 21, 2009)

Not only primary residence, intent to file income tax reports yearly has to be shown, in our case we are requesting NHR, which implies taxes will be filed in Portugal.


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## TonyJ1 (May 20, 2014)

Off course - if it is your primary residence, it implies you live here, and therefore tax returns. There could still be the case (in very limited circumstances), where the primary residence is in Portugal, and not have to submit tax returns - but off hand, I can think of very few exceptions (e,g. living off capital and the capital is invested in Portuguese banks, is one instance).

I have had a quick read at the applicable article that grants the above tax exemption / holiday, but I cannot spot the requirement that a tax return has to be made, as mentioned above there can be circumstances where returns are not required, but the overall implication is that if you request an exemption than you are liable to submit a tax return - which follows.


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