The Algarve’s main hotel association has stated that the amendments to the way property rates are determined "penalises the Algarve’s tourism economy."
The amendments in the decree published on Monday will have "a direct impact on tourism in the Algarve, including residential tourism" warns the Association of Hotels and Resorts in the Algarve (AHETA), in a statement responding to the so-called ‘sunshine tax’ that will hit owners of south facing properties with pleasant views by an estimated 20% rise in their annual rates bill.
The association today stressed that the changes to the IMI Code will penalise a region where the quality of its tourist and residential supply is based on single-family houses, exceptional location and south-facing houses.
The AHETA said that the new measure affects the Algarve's "external image" and "calls into question the attraction of foreign direct investment in the Algarve.”
The association said the so-called ‘solar tax’ will hit the residential tourism sector "which only now is recovering."
The ordinance n.º41/2016, published on August 1st, introduces an amendment to the Municipal Tax Code for Real Estate and raises the coefficient for location used to calculate rates bills.
The law now states that the coefficient for location can be increased by up to 20% if the property is deemed to have a sunny aspect and has a patio or a pool, or any other luxury item that poorly paid tax inspectors can view with jealousy.
Thus, if a property has a south orientation, is an apartment on a high floor or has a 'special area' such as a terrace, the ratio employed in the calculation could rise to 20%.
Many Algarve properties have been built with solar capture in mind as a way of reducing heating bills in the winter and of generating renewable energy to reduce the reliance on fossil fuels. These now are to be penalised as 'facing south' is a new and expensive option.
The new law has been criticised by Social Democrat MPs who have requested that the law not be put into practice. The CDS announced that the five Social Democrat controlled councils are refusing to apply any IMI tax changes until the law is reconsidered by parliament.
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