The Algarve Social Democratic Party MP, Cristóvão Norte, has spotted that the Algarve will be hard hit by changes in the taxation of those registered for Alojamento Local tourist rentals.
Alterations proposed in the State Budget for 2018 are the focus of Norte’s ire, on behalf of the region’s registered landlords, and he confronted the prime and finance ministers during the general debate on next year’s taxation changes.
The detail of the alterations to the simplified tax regime would lead to a tax increase for all category B income holders. This will hit landlords and small traders in the region, among 150,000 people in the country.
According to Cristóvão Norte, "the government decrees the end of the simplified regime with automatic deductions which will complicates the lives of people, who, unknowingly, will suffer a hike in taxes ... someone who has a income of €2,500 per month and has no expenses to file - which is true in many cases - will suffer a 22% income tax rise."
Regarding local accommodation, the MP said that "in 2017 the Government increased the tax burden for local accommodation and promised not to do it again and now is to remove the carpet under the feet of those who invested and are making a major contribution to the country's economy, whether in doing up buildings for rental or in the fight against the grey economy for tourist rentals. In 2018, the tax increase will be overwhelming."
With regard to the Algarve, Cristovão Norte understands that "these measures are bad news for the region, since the Algarve represents half of those properly registered for Alojamento Local - over 28,000 - this has been important to boost tourism and counter the parallel economy, in addition to creating more self-employment."
The undesirable result, says the Social Democrat, may be "a return to the grey economy and an increase in prices that will make the region less competitive.”
Speaking to the Minister of the Economy about green receipts, Norte said that "these measures have a logic that discourages initiative, hinders autonomy and undermines traders and small entrepreneurs."
In summary, Cristóvão Norte considers that "the Government is committing a serious injustice: common sense commands that it backs down. It is taxing those who have initiative and are creating their own jobs.”
The opposition MP also mentioned the fact that, despite frequent launches of wonderful sounding infrastructure projects, the Minister for Planning and Infrastructure, Pedro Marques, successfully had wriggled out of contracting work in 2018 for the remaining section of the EN125, the electification of the Algarve's railway, a railway link to the airport, a bridge over the Guadiana river at Alcoutim and the creation of a docking area in Portimao that can accept larger cruise ships - all of which have been dragging on for years but have not happened as the Algarve continues to suffer from discrimination from Lisbon, whatever the shade of government.
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For property owners looking to go legitimate, contact the National Association of Local Lodging Establishments at www.nalle.pt and/or ask afpop for information.
