The State Budget for 2017 has brought a very significant news concerning property tax: the additional tax on municipal property tax (AIMI).

The taxable amount corresponds to the sum of the VPT of the urban properties or properties for construction located in the Portuguese territory owned by the taxable person on the 1st of January of that same year (unlike the municipal property tax which is paid in the following year, the AIMI is paid on the year it concerns).

To the referred VPT sum should be deducted the amount of 600.000 Euro whenever the taxable person is a natural person or an undivided estate. It naturally follows that there is no such deduction for companies.

Rates vary from 0,4% and 0,7% depending on the type of taxpayer. There is still a marginal rate of 1% for higher value estates.

Therefore, taking into account that this tax should be paid until the end of September, we provide you everything you need to know:

  • Subjection
  • Natural persons
  • Undivided estates
  • Taxable amount
  • Tax Rates
  • Deductions
  • Important deadlines

Any doubt, please contact us.

Subject

This new tax applies to all natural persons (resident and non-resident) and legal persons (companies; undivided estates; etc.) that, on the 1st of January of each year, are the owners or usufructuaries of real estates located on the Portuguese territory classified as permanent place for residence or property for construction. Therefore, urban properties classified as commercial, industrial or for services remain outside the scope of AIMI.

Natural persons

In the case of natural persons married or non-married there will be an option for joint taxation, which will provide a 1.2 million Euro deduction. Taxable persons married under the community property system that don’t want joint taxation can (by a joint declaration presented on the Finance Portal between the 1st of April and the 31st of May of each year) identify the ownership of the assets, mentioning which assets are owned by each one and which are owned by the couple.

Undivided estates

When it comes to AIMI, undivided estates have some particularities. First, if nothing is done, the undivided estate will be treated as a legal person, which means we can have a patrimonial collection of the estate subject to the AIMI because his total VPT reaches an amount subject to taxation. However, if each heirs’ share is duly identified, that same patrimony cannot be subject to taxation for each heir.

In order to exclude the equivalence between undivided estates and legal persons, during this March the head of the household (on the Finance Portal) should identify the heirs and their shares. Afterwards during the month of April each heir should confirm its share (also on the Finance Portal).

Naturally, if that equivalence no longer exists, each heir’s share adds to the amount of VPT that are part of the matrix of the heir’s ownership, for establishing the taxable amount.

Taxable amount

The taxable amount corresponds to the sum of the VPT of the urban properties or properties for construction located in the Portuguese territory owned by the taxable person on the 1st of January of that same year (unlike the municipal property tax which is paid in the following year). Are excluded from the taxable amount the VPT of the properties exempted from paying or those that were not subject to IMI in the previous year (for example, this exemption applies to the purchase of properties for resale).

To the referred VPT sum should be deducted the amount of 600.000 Euro whenever the taxable person is a natural person or an undivided estate. It naturally follows that there is no such deduction for companies.

Tax rates
  • Legal persons (companies, foundations, associations, etc.):
    • General rate: 0,4%
    • Properties for personal use of its partners or members of the corporate boards:
      • 0,7% on the taxable amount up to 1 million Euro; and
      • 1% on the surplus.
  • Natural persons:
    • 0,7% on the taxable amount up to 1 million Euro; and
    • 1% on the surplus.
  • Undivided estates: 0,7% (when the equivalence to legal person exists)
  • Entities in offshores: 7,5%
Deductions

Natural persons

It is possible for taxable persons to deduct the AIMI on the IRS as long as they have incomes attributed to urban properties for permanent place for residence or properties for construction until they reach:

  1. part of the IRS proportionate to the net income from property (in case of inclusion), or
  2. the amount obtained by applying the 28% tax on the income from property not included.

Similarly, it is possible to deduct the AIMI on the incomes from companies obtained from rent or accommodation.


Legal persons

In terms of IRC, companies can choose whether to consider the tax as a cost fiscally deductible or, alternatively, deduct it and until it reaches a fraction correspondent to the incomes from properties subject to AIMI obtained from rent or accommodation.

We stress that this deduction is not possible for entities in offshores.

Important deadlines

Please take note of these relevant deadlines:

  • By 31st March – the head of the household of the undivided estate has to deliver an identification of all the heirs and their shares, if he wants to exclude any equivalence to a legal person;
  • By 30th April – following the previous option, the heirs must confirm their shares on the undivided estate;
  • From 1st April until 31st May – taxable persons married or not married must choose joint taxation, if they want to;
  • From 1st April until 31st May – taxable persons married under the community property system that don’t want joint taxation have to deliver a joint declaration identifying the ownership of the assets owned by each one and those that are owned by the couple, if they want to be taxed individually according to their properties and their jointly-held assets;
  • June – annually, during the course of June, Finance will calculate the AIMI and notify the owners of the tax need to be paid;
  • By 30th September – the AIMI should be paid by the taxpayers until the end of September, each year.


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