Algarve hotels slam new tax on high-end Portuguese properties

Belem Tower, Lisbon, Portugal
Belem Tower, Lisbon, Portugal

Hotel representatives in the Algarve have slammed a new tax proposed by the Portuguese government on high-end properties.

The country’s minority government and its left-wing allies announced plans this month to introduce the new charge, which would apply solely to real estate in the top tiers of the market. The tax, which Reuters reports has been discussed for some time, has been described by Portugal’s Left Bloc as progressive, in that it would be applied to any property holding worth over €500,000, to up to €100,000.

The exact tax rates are not yet confirmed, but the government has emphasised that the levy is “not a tax on middle-class families, not upper-middle class families”.

“The economic point of this tax is to reach the big property fortunes,” said legislator Mariana Mortagua.

Indeed, there is already a municipal property tax on all property that charges 0.8 per cent of a home’s value. The new charge will exclude those worth under half a million euros, as well as all commercial buildings, such as factories.

The plans will be outlined soon in the country’s budget for next year, with real estate investment funds subject to the tax.

However, the tax has already been slammed by both the centre-right opposition in the country and the Algarve’s largest hotel association, AHETA. Both have warned that the tax could undermine investment from overseas investors, with international demand for Portuguese property helping to drive the market’s recovery in recent years.

AHETA cautioned that the tax would scare off potential investors, particularly in the residential tourism market.

It follows another controversial tax proposed by Portugal, which would see homeowners charged on the basis of how much sunlight their property receives, and how good the views from it are.


Plan for Portugal sunlight tax “makes no sense”

20th September

A room with a view may soon become a room with a tax, should a new Portuguese law come into effect.

The recently published Law Decree number 41 of 2016 is a bizarre proposal that would see homeowners taxed based on the amount of sunlight they get in their home, and the quality of the view they enjoy. Those with nice views and better solar exposure could see themselves facing council tax hikes of up to 20 per cent.

While other factors will be taken into account to determine which properties are the nice ones, such as noise pollution, the tax will essentially amount to a tax on daylight and scenery. Those overlooking cemeteries, for example, may see their council tax reduced by up to 10 per cent.

The idea will only be introduced for new properties and those being reappraised, rather than retrospectively applied to existing dwellings, with government officials arguing that the tax is not intended to boost revenue, but to tax people based on their homes and luxuries in the spirit of greater financial equality.

The real estate industry, though, has rubbished the plan, with the Association of Lisbon Homeowner President Luís Menezes Leitã saying it makes “no sense whatsoever”.

“The idea of taxing a heritage itself is already very serious, because the assets can not generate any income and people ultimately may even lose their properties as a result of being taxed for a property that does not generate income,” he added.