A seminar in Albufeira, attended by 200 delegates, was devoted unravelling the new ‘local lettings’ legislation launched on April 21st, 2015 by the Secretary of State for Tourism, Adolfo Mesquita Nunes.
There are many questions but few clear answers for owners and companies involved in the buoyant lettings market and in this third such session hosted by Moneris, the attendees included property owners, business people, lawyers, solicitors and accountants.
The publication of Decree-Law 128/2014 brought profound changes to the Alojamento Local accommodation rules, and profound despair for many property owners who had hoped for a simplification of the rules, not what many see as more state intrusion and regulatory hurdles designed to deter rather than to encourage.
Rui Almeida, the head of Moneris, opened the seminar by saying that there "appeared to be a number of issues regarding the fiscal framework provided in this new law, including issues about various taxes,” including corporation tax, income tax, VAT and social security obligations which for many make lettings an uneconomic proposition.
The new law has caused such an underwhelming response from exasperated owners that Moneris already has sent a paper to the Secretary of State for Fiscal Affairs, seeking explanation and offering guidance.
This latest event was attended by MP Elsa Cordeiro, the Mayor of Albufeira, the Vice-President of the Algarve Tourist Board, the Chairman of the Albufeira Bar Association, the President of Albufeira’s Chamber of Solicitors and a representative from the Albufeira Promotion Agency.
That a piece of new legislation needs this heavyweight line-up is indicative of its importance and in this case, its complexity.
The new law aimed to simplify private accommodation rules, or Alojamento Local, but in the opinion of many owners, has failed to do so in a market created from the 140,000 second homes in the Algarve, many of which are for short-term rent as owners struggle to pay ever-rising costs. Yet many properties remain unregistered due the offputting nature of the regulations that were designed to simplify matters.
There has been a rise in registrations though and at the Faro launch of the new law on April 21st, 300 delegates heard from Eurofinesco’s tax expert Dennis Swing Greene about the launch of the National Association of Local Lodging Establishments (NALLE), dedicated to helping those who let their properties and wish to do so legally.
Adolfo Mesquita Nunes said at the time that the compliance system was ‘simpler’ despite the continuing involvement of local councils, the tourist board, Finanças, ASAE and the Immigration and Borders Service. Fudged answers about fines did not help the mood of the audience made up mostly of property and lettings agency owners.
NALLE membership includes a 35 page book covering key aspects of the legislation and taxation requirements for local lettings to help its members avoid fines of between €2,500 to €3,740 for individuals and €25,000 and €35,000 for companies. For those in the business is is essential to get registered and at least there is an association out there to help answer questions.
The next move from the government may be some real, as opposed to threatened, checking up on lettings using tax records and lettings website listings so, despite the irritation of becoming street legal, it has become an imperative.
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Ed's '5 minute solution' - please add your comments:
1. Property owners register their accommodation for free on a new Turismo do Portugal Lettings website, the largest lettings site for the country where tourists can book and pay for their holiday breaks.
This site is similar to AirB&B - but free - and heavily advertised and promoted on the web where most people book their flights and their holiday accommodation.
The site is self-regulating as customer feedback weeds out poor accommodation.
As people are paying online the government has a good idea of owners’ income
2. There is a box on the registration site which asks, are you registered at Financas? If you are not, you can go no further but are filtered to a Finanças registration page in the language you have selected.
If you are registered then it is easy for Finanças to cross check you income statements to see that you have registered ‘rental income’ in your tax return. Rental income is then taxed at 5%
By making the rental site the biggest for Portugal, owners are encouraged to join.
By making the tax rate low, more revenue will be collected overall.
This will do away with the involvement of many government departments and rude, threatening officials such as those employed at ASAE.
End of suggestion.
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In the meantime owners are encouraged to contact :
NALLE http://nalle.pt/
Moneris http://www.moneris.pt/home.php
See also: "Villa rentals encouraged by Secretary of State for Tourism"
Comments
Step 1 is register your INTENT to start a tourism business in your EU place of origin / home land. This is sent to the nearest Portuguese embassy / consulate for onward transmission to your Portuguese regional Turismo HQ.
Step 2 - This regional Turismo checks every month for say a year that not only there are no obstructions, only helpful assistance, but also all avenues are open - such as tourism premises conversion grants. Also monitoring over-charging.
Step 3 - Successful results are fed back to the Portuguese embassy / consulate in your homeland for onward analysis. That way hopefully identifying any of the 308 municipals to have targeted funding cuts for anti-EU behavior by Brussels.
Relying on the Portuguese to police themselves when they are clearly - even after 30 years in the EU - just far too 'damaged' is wasting quality EU citizens time and money.
Unfortunately the local administrators did not do their job properly (the same as today!) and as such only a fraction of the owners registrate with AL. In many countries in the world the registration process works excellent (Belgium, Holland, Andorra, Canary Islands, Austria,...) only in Portugal it fails completely !!! How humoristic is that, isn't it ?
A small 'percentage of turnover' tax would be paid and the whole Lettings market becomes open, transparent, easy to use, regulated by customers in terms of quality, self-financing and a breath of fresh air to Portugal's red tape bound systems and procedures.
This is why Ed's excellent ideas will never be discussed by the minister, let alone adopted as practice.
Ed's ideas are too damn simple and fail to keep hordes of busybodies in work checking every last bedroom size and guest's passport number and expiry date.
Many owners will continue to carry on renting to repeat/return guests, realising that the only owners who will ever be hassled and those that are registering under this latest system which is just as clueless as the last.
Financially self-supporting through booking commissions, easy to use for the user and owner, self-regulating for quality of accommodation and a low tax rate will ensure thousands more cross over and become legal.
Please apply for the job of Minister at once - your (adopted) country needs you!
The current reworking of an old tune is truly hopeless, witness the seminars and support group set uop just to help people through the maze - 'lamentable.'
Politics in Portugal is a question of "opportunities and opportunism" and the results of all that is "were we lucky or did we fail, (again) " ????
As far as AL concerns: the minister of finance "violated and stripped" the 39/2008 law and made it a simple tax law.
I think we have to see that as one of the hundreds "experiments" she and others made and nothing matters no more as in a couple of months all the ministers know they will be sent on Holidays (again) for the coming 4 years, allowing the PS now to do "its experiments" and consequently to push the country in even more deep waters, no matter what the solutions or the outcome might be.
I can only repeat what I already said hundreds of times: "poor country"!
After 30 years of Portugal allegedly in the EU it must be punished by the Troika for intentionally holding back the EU economy - which would have certainly grown with EU foreigners servicing micro-niche tourism sectors in Portugal.
After all - this supposed alojamento application simplicity is Troika driven. Just as the delays and obstructions remain as ever Portugal's.
Cut back the Portuguese municipal subsidies by the estimated missing billions, Brussels !
As many of us say privately; now we must say it publicly so that the Troika hear - and act.
Allowing foreigners to trade in the Portuguese tourism sector is a Red Line. Red Lines have to be declared formally and opt outs made clear as the UK does.
This devious dishonesty by Portugal needs exposing as, not knowing about this 'secret' red line, thousands of EU foreigners are just wasting their lives, life savings and pensions attempting to license their property for tourism.
Now forward this to your MEP - or one of Portugal's !