THIS YEAR DO NOT RENT UN UNLICENSED PROPERTY: For many years, property owners and property management companies in Portugal have been able to let properties commercially without a great deal of interference from the State. Now, however, both owners and agents need to apply for a government approved commercial letting license, known in Portuguese as Alojamento Local. The government has moved to ensure that the quality of real estate let to tenants and holiday makers in Portugal is of an adequate level in terms of facilities and safety, with fines for non-licensed properties ranging between two and a half thousand and twenty five thousand Euros. A property owner or property manager who wishes to let a villa or apartment commercially is obliged by law to apply for the Alojamento Local license before commencing commercial activity. The early drafts of this new legislation were unclear and, as such, unenforceable. As a result, government lawyers simplified the law and the final version of Alojamento Local is already in force with fines levied on owners and agents who fail to comply. Prior to a property in Portugal being deemed suitable for rental purposes there are now several criteria that need to be addressed. The real estate must be in good general condition, clean and with no obvious problems such as damp or dry rot. There must be one bathroom to every three bedrooms and all bathrooms must be furnished with at least one toilet, one sink and a bath or shower. Additionally, all rental properties must provide fresh, running hot and cold water as well as mains sewage or a septic tank. They must also be well furnished, offer adequate ventilation and have either blinds or drapes to stop light entering at the tenants discretion. Security of the rental property must also meet prescribed standards with locking external doors a pre-requisite. Inspections by government appointed electricians and gas engineers must be undertaken. Once the property has passed these inspections, the property owner or their property management company will receive a certificate confirming that the building is suitable for renting with respect to these utilities. An inspection by the local Fire Department will also be needed to certify that the building meets the required standards for fire safety. The new laws affecting property rentals in Portugal also include other articles that must be addressed before a property can receive a commercial rental license. For example, a complaints book is mandatory under the new directives and a laundry service must be put in place to provide clean linen at least once a week. The rental property must clearly display contact numbers and information pertaining to emergency services. It will need to provide enough fire extinguishers and blankets for the buildings size and all appliances, electrical and otherwise, must come with the proper instructions. If there are more than fifty beds in a rental property in Portugal, it must have a dedicated alarm and telephone line in case of fire and an additional fire safety project will need to be provided during the application process. Assuming that a property meets the aforementioned conditions and that all documents and certificates are in order, the application process may begin. Applications are submitted with all relevant documentation to the respective local council department in charge of commercial letting. Relevant documents include the property owners identification, the habitation license, approvals issued by the inspecting electrical, gas and fire officials, plans of the building itself and tax paperwork. Fines There are stiff fines for failure to comply see table below: This procedure falls in line with the overall philosophy of this new legislation: “the Carrot and Stick Approach”. Obey the law and you will be rewarded with simplified bureaucracy and low taxes. Run afoul of the new rules and you face heavy penalties. Options This reporting requirement puts to rest the controversy regarding the optional nature of operating under Category B or Category F. As summarised above from the new legislation, only those registered in Category B (CAE 55201 or 55204 - furnished accommodation for tourists) can exercise Local Lodging. Those providing accommodations to registered Operators for onward Local Lodging operations must declare under Category F (Rental Income). This form of income is taxed at a rate of 28%, 7½ fold higher than the rate for Local Lodging under Category B. For example, annual rental income of €15,000 will pay €4,200 in Category F as opposed to just €563 in Category B. In addition, Category F rental income cannot recover VAT paid on overheads as is normally the case under Category B. Local Lodging Renewal Those who thought they had sorted out their Local Lodging requirements now have an important task to accomplish to avoid steep fines and unwanted attention from authorities. If Non-Residents do not plan to be in Portugal in December, they should arrange for their Fiscal Representative to report to the Câmara. If no Fiscal Representative exists, this might be the chance to appoint one to handle such unforseen events. Some Expatriate Services Companies offer Fiscal Representation at no extra charge with their Local Lodging package.
Posted on: Thu, 22 Jan 2015 07:34:33 +0000
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