Portugal is desperately short of tax income as a result of the sizeable ‘black’ economy and the government is targeting holiday rental accommodation as one means of boosting tax revenues. The government has been pressurised by the hotel sector which has complained for a long time about the unfair competition posed by the rental accommodation sector which has traditionally not met its obligations in respect of taxation.
It has always been the case that an owner receiving income from the rental of his / her property must register with the Portuguese tax authorities and make an annual tax return, even if tax is paid in their home country.The government has recently simplified the rental licence application process and has even lowered the rate of tax to be paid in an attempt to boost tax revenue from the rental sector.However, in a simultaneous move, it has greatly increased its monitoring of the sector with a view to penalising those who have not complied as of the end of 2014.
It is simplicity itself for the government to discover properties for rent as these are widely advertised on numerous websites, some even giving out the e-mail address of the owners.
A common and costly mistake that property owners have made in the past is to employ casual labour to service their property. Cleaners, gardeners and pool cleaners abound in the illegal sector. If the individuals working illegally are trapped then so is the owner of the property who will be hit with massive fines.
There are some bogus property management ‘companies’, usually a man and wife couple who undertake such work and who can be the avenue by which the taxman arrives at your door. These people work for cash and are likely to be denounced by those legitimate companies with whom they compete illegally.
If you want to avoid being caught in the government’s trap use only a bona-fide property management company which pays its taxes and whose employees are properly insured.You have been warned!
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