They are believed to be raking in as much as a billion euros per year, and now the Troika wants in on the action. It has ordered the government to clamp down on illegal renters in no uncertain terms – with tourist rentals at the top of the list.
According to Correio da Manhã, the “parallel rental market” involves well over 400,000 properties up and down the country. Owners do not issue rental contracts and properties are not therefore registered at tax offices. This means landlords side-step declaring any income on their tax returns, and also avoid stamp duty that would be payable on rental contracts.
Altogether, loss of income to the state could reach as much as €300 million every year, writes CM – thus the sudden zeal powered by representatives of the International Monetary Fund, European Commission and Central European Bank.
“The troika wants the government to combat tax evasion by landlords,” headlined the paper on Monday, stressing that the tourist market is destined for closest scrutiny.
The plan is for tax offices to send teams out onto the ground.
Holiday villages around Lisbon have already been visited, with the majority of residents unwilling to play ball.
“Someone from the authorities was going around asking for a German by name,” said a local in the Sintra hill village of Ulgueira. “They wanted to know where he lived and where one of his properties was. I pretended I didn’t know. No one likes this kind of thing.”
Elsewhere, householders have been found changing the names of their properties on gateposts in order to flummox the roving tax teams.
But like it or not, the new rules are making themselves felt.
According to CM, the EC document setting out measures that Portugal has to implement both this year and in 2015 is “categorical”: “Efforts to combat tax evasion and tax fraud must be intensified, particularly through the system of issuing electronic receipts.”
A study on the “parallel market” is now ongoing, with university towns also under the microscope. Explains CM, illegal rentals are rife in and around these towns, with apartments and rooms all being offered without contracts or the issuing of any receipts.
News that the clampdown was on the way came as far back as last year (see Algarve Resident article of March 28 2013 entitled “Stamping down”).
Decree-Law nº39/2008 actually made it mandatory to obtain a licence to rent a private property – even if only temporarily. The property then became “Alojamento Local” (local lodging).
The move was backed by hotel associations who complained that unlicensed holiday accommodation constituted “unfair competition for establishments that have to pay taxes and are subject to regular inspections from the authorities to ensure all safety and hygiene requirements are met in order to be legal to trade.”
The tax on private rentals is as much as 28%.
