It could be the cold shower for owners of touristic and seasonal rental property in Portugal. Indeed the ALEP, the association of Alojamento Local in Portugal (seasonal and tourist rental) warned this Thursday that the increase in the tax for housing included in a containment zone represents a tax increase of at least 43% and up to 70% in some cases. Although nothing is yet final, the Portuguese State Budget for 2020 suggests a sharp increase in taxes for owners of Alojamento Local registered property in containment areas. This increase, deemed excessive by professionals in the sector, jeopardizes several hundred jobs and calls into question the profitability of Airbn’b type seasonal and tourist rentals. What are the details of this tax change for the Alojamento local ? What are the expected consequences ? Lisbob, the expatriate assistant in Portugal, tells you all about this tax increase for owners of vacation rental homes.
Up to 70% more tax for Alojamento Local owners : ALEP is raising the alarm
55% of owners impacted by this increase
According to the ALEP, several hundred jobs and families will be directly impacted by this new measure. "In Lisbon alone, there are more than 5,000 families and half a hundred micro-businesses impacted by this fiscal increase, with tax increases of at least 43%, up to 70% depending on the level of taxpayers. " This is the conclusion of the Association of the Alojamento Local in Portugal (ALEP), after having carried out a technical study to calculate the impact that will have the budgetary worsening foreseen in the proposal of the Portuguese government for the Budget of the Status for 2020 (OE2020).
Also according to ALEP, the number of families and smallholders affected by the aggravation, if approved, represents more than half (55%) of all owners of real estate in Lisbon.
Lisbon, Porto, Ericeira and Mafra will be the most affected cities
"It would be a very heavy blow with very negative effects on tourism in the capital, since the alojamento local represents almost half of the tourist nights in Lisbon," said ALEP in a statement published on Thursday, warning that hundreds of families would be immediately affected in Ericeira (municipality of Mafra) and, in the medium term, thousands more in Porto and even in Moscavide (municipality of Loures), where the containment zones are being prepared.
In its note, ALEP stresses that its greatest concern "lies in the weakened profile of the families that will be affected, since the aggravation only targets the simplified regime where small owners and micro-enterprises that have only these alojamento local incomes as sole salary ".
Lisbon, Porto, Ericeira and Mafra will be the most affected cities
According to the association's survey, the taxpayers who will be affected are almost all private owners, "with 19% having between one and three registered property and most (60%) having only one dwelling".
"The alojamento local is for the vast majority self-employed and not a form of investment", that is to say that it is the main or only form of income, net income after expenditure and taxes of these households ranging between 450 and 850 euros per month.
One month less income
The ALEP also underlines that, compared to salaried work, the aggravation proposed is almost equivalent to withdrawing one month of annual remuneration from a taxpayer who receives on average 650 euros per month of salary.
Last week, the association had already criticized the government's proposal to exempt from capital gains homes that abandon the alojamento local for long-term rental for five consecutive years, saying that this could have the opposite effect than that According to the proposal of the State Budget, the transfer of a property is not considered as a capital gain.
