Due the government’s inability correctly to identify certain exempt categories of property owners who should not be paying annual property tax (IMI), next year’s State Budget is likely to do away with exemptions altogether affecting over a million owners.
Properties with a valor patrimonial of €66,500 or under, whose owners declare an annual gross income of €15,295 or less, currently are exempt from paying IMI.
The government’s Tax Authority now is complaining that in the first IMI installment this year it was at least €57 million short as many Portuguese working overseas and foreigners living in Portugal do not declare their income to the Portuguese authorities.
Those who do not declare their overseas income in Portugal enter the ‘automatically exempt’ category for IMI purposes as long as their valor patrimonial is under the €65,000 limit.
Currently the exemption is confirmed by cross referencing the property owner’s annual tax declaration with the property’s valor patrimonial and IMI liability, both held on the Tax Authority’s computer systems. If no annual tax declaration is received, the IMI exemption is applied even though the onwer's earnings may be in excess of the €15,295 limit.
Deputy Minister Eduardo Cabrita said these IMI exemptions were granted "especially in tourist areas or in areas with high levels of emigration, and the fact that municipalities do not have the information to enable them to manage their taxes is something that is not acceptable and is even unconstitutional, and that the problem will be fixed in the next State Budget."
The thought of asking those who do not declare their earnings in Portugal to supply an overseas income tax statement to see if they qualify for IMI exemption, seems not to have crossed the deputy minister's mind, so an end to the exemption scheme now seems likely to be inlcuded in the 2017 State Budget.
