As promised at the last Troika review, Portugal’s government is now full steam ahead in its effort to clamp down on undeclared rental income.
The Ministry of Finance said that 2014 is the year it is going to intensify inspections in the real estate rentals sector to combat the "many situations" of fiscal irregularity under its general clean up of fraud and the black economy.
The European Commission report on the tenth review of the financial adjustment programme expressly stated that the Portuguese Government has committed to conducting a survey of undeclared income from property rentals.
In the report, Brussels indicated that the study should be completed by the 12th and last Troika review which is schedueld for early this summer.
Finanças have more than 400,000 suspect properties where tax evasion is estimated to be costing €300 million a year.
The Ministry of Finance said it has detected "numerous situations that indicate omission of facts and undeclared income," following which the Tax and Customs Authority, through its Directorate of Fraud Investigations, has now been instructed to crack down on evasion in the rented homes market, especially tourist rentals.
The Ministry commented that "the activity of the Tax Inspection Authority will be boosted with more inspectors, and more legal and technological resources to control, detect, correct and punish offenders in this economic sector."
Inspections will be made by sending inspection teams into the field with a main target of properties let to tourists and students. This illegal rentals market sector is estimated to turn over about a €1 billion in revenue.
