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Changes to the reporting of letting income
Changes to the reporting of letting income
A new law was published on 29 December which will take effect from 1st December 2014. This alters the previous regulation in respect of the AL regime in various ways and also imposes Category B "business" income reporting on all persons letting for periods under 30 days which is now classified as “prestação de serviços de alojamento".
This brings good news and not so good news but is largely positive for those who let.
More info to follow once all is digested (like my lunch)
This brings good news and not so good news but is largely positive for those who let.
More info to follow once all is digested (like my lunch)
Re: Changes to the reporting of letting income
Hi Biffa,
Is there any update on this? More specifically what information is being demanded? We are currently being asked to provide accountants with very detailed client information. I have no issue with releasing dates of rentals and amounts but will not be giving out personal details of those booking, and I suspect the request would contravene the Data Protection Act.
Any advice would be welcomed!
Thank you.
Is there any update on this? More specifically what information is being demanded? We are currently being asked to provide accountants with very detailed client information. I have no issue with releasing dates of rentals and amounts but will not be giving out personal details of those booking, and I suspect the request would contravene the Data Protection Act.
Any advice would be welcomed!
Thank you.
Re: Changes to the reporting of letting income
I have also just heard a copy of the guests passport should be taken and lodged within 3 days. then also confirmed when they leave. That is Crazy if true. This apparently can be done online.
Re: Changes to the reporting of letting income
This would be going back to the bad old days.LICY wrote:I have also just heard a copy of the guests passport should be taken and lodged within 3 days. then also confirmed when they leave. That is Crazy if true. This apparently can be done online.
Re: Changes to the reporting of letting income
There is some info on this in the October Newsletter , see :
http://www.carvoeiro.com/finance/New%20 ... %20rentals
though something tells me it won't be that simple!
http://www.carvoeiro.com/finance/New%20 ... %20rentals
though something tells me it won't be that simple!
Re: Changes to the reporting of letting income
So less tax - good, but more accountancy fees. Sovereigns will be about £1,000 pa if you can reclaim VAT or £1,200 if you cannot. Cannot see that encouraging many people to start letting or declaring unless you can guarantee a good rental return.Geoff wrote:There is some info on this in the October Newsletter , see :
http://www.carvoeiro.com/finance/New%20 ... %20rentals
though something tells me it won't be that simple!
Re: Changes to the reporting of letting income
As our name has been mentioned I feel able to come out of the closet (!) and say that here at Sovereign we are still very busy studying and researching the best way to handle these changes. Some things are clear - if you wish to let for tourism purposes you must register with your local council for AL and you must register with the Finanças a start up of activity and declare the income under Category B (business income). Many councils are still unaware of the changes!
One problem is that the admin cost of such reporting is more onerous than simple income reporting as was often made before. In addition, the much vaunted Simplified Regime is not a panacea for all cases. We have already seen how property owners with high allowable deductions (those with high condominium costs etc) may be worse off under the Simplified Regime (S.R.) than before! This is simply due to the fact that under the S.R. you will be taxed on 15% of the income even if your real expenses amount to more than 85% of that income.
At Sovereign we always felt that reporting under Category B was only an advantage to those with above 20k rental income due to the expenses involved so we opted to continue under Category F. The 28% income tax level was not helpful to that but tax is paid on profit so low or no profit = low or no tax. Now we are forced to move to Category B by the new law.
For cvo.com members please rest assured that we will try to find the best way to handle this even if it means various tiers of admin cost based on levels of rental activity. We are a commercial company and must make money to survive but we do have our clients interest to the fore and will do the best we can to continue in that manner.
One problem is that the admin cost of such reporting is more onerous than simple income reporting as was often made before. In addition, the much vaunted Simplified Regime is not a panacea for all cases. We have already seen how property owners with high allowable deductions (those with high condominium costs etc) may be worse off under the Simplified Regime (S.R.) than before! This is simply due to the fact that under the S.R. you will be taxed on 15% of the income even if your real expenses amount to more than 85% of that income.
At Sovereign we always felt that reporting under Category B was only an advantage to those with above 20k rental income due to the expenses involved so we opted to continue under Category F. The 28% income tax level was not helpful to that but tax is paid on profit so low or no profit = low or no tax. Now we are forced to move to Category B by the new law.
For cvo.com members please rest assured that we will try to find the best way to handle this even if it means various tiers of admin cost based on levels of rental activity. We are a commercial company and must make money to survive but we do have our clients interest to the fore and will do the best we can to continue in that manner.
Re: Changes to the reporting of letting income
I mentioned Sovereign and their costs. I appreciate that the system will be more onerous and time consuming, therefore costs will be higher. It was a simple observation that if rental income/profit is low then the extra costs will outway any tax savings, and was not meant as a criticism.biffa wrote:As our name has been mentioned .....
Re: Changes to the reporting of letting income
Hi Sam
No I never felt you were critical of our company. These are mad times here with those in government who have no feel for what is happening on the street changing legislation willy nilly often as a knee jerk reaction demands from above for increased fiscal income. However, our job is to find the best solution to combat the system and I think we have found a fair way for all our clients to take the best from this new law at reduced cost. More next week!
No I never felt you were critical of our company. These are mad times here with those in government who have no feel for what is happening on the street changing legislation willy nilly often as a knee jerk reaction demands from above for increased fiscal income. However, our job is to find the best solution to combat the system and I think we have found a fair way for all our clients to take the best from this new law at reduced cost. More next week!
Re: Changes to the reporting of letting income
IF your tax band in UK is say 20%, then does it make any difference if the Portuguse tax you at 3.5% ? Your final tax bill for rental will be 20% in UK less whatever you have already paid in Portugal. (Unless of course you don't declare rental income to the UK authorities). If you have no UK liability I can understand paying as little tax in Portugal as possible. Or am I missing something ?
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Re: Changes to the reporting of letting income
Its not nearly as simple as that joeysoap.
The new PT system is a fixed tax based on the total rental income regardless of costs, whereas the UK system is based on declared rental income MINUS "allowable" costs where UK allowable costs are and always have been more generous than and completely different rules from the PT tax regime.
Vive la EU standardisation
The new PT system is a fixed tax based on the total rental income regardless of costs, whereas the UK system is based on declared rental income MINUS "allowable" costs where UK allowable costs are and always have been more generous than and completely different rules from the PT tax regime.
Vive la EU standardisation
Re: Changes to the reporting of letting income
.....no, but if the net result is a UK tax liability, Joeysoap is surely correct that it doesn't really matter what Portuguese tax has been paid , it will be netted of the UK tax liability ?.....The Portuguese tax man gaining over his UK cousin?Its not nearly as simple as that joeysoap.
Re: Changes to the reporting of letting income
Even if it does not make any difference to the final tax bill then it will still cost more in accountancy fees in PT - the tax man in PT will get a cut of that too.joeysoap wrote:IF your tax band in UK is say 20%, then does it make any difference if the Portuguse tax you at 3.5% ? Your final tax bill for rental will be 20% in UK less whatever you have already paid in Portugal. (Unless of course you don't declare rental income to the UK authorities). If you have no UK liability I can understand paying as little tax in Portugal as possible. Or am I missing something ?
Re: Changes to the reporting of letting income
We have now arrived at a standard rate for dealing with this reporting procedure but with discounts available for those with low rental incomes. This is not the place to advertise commercial business so if anyone is interested please PM me and we will reply to you with details.
Please let me know what your 2014 income is expected to be and if your property is held "offshore" or not.
Please let me know what your 2014 income is expected to be and if your property is held "offshore" or not.
Re: Changes to the reporting of letting income
I'm curious why a "standard rate" for dealing with a reporting procedure should be discounted if your rental income is low?biffa wrote:We have now arrived at a standard rate for dealing with this reporting procedure but with discounts available for those with low rental incomes. This is not the place to advertise commercial business so if anyone is interested please PM me and we will reply to you with details.
It suggests that a T1 apartment enjoying 50% occupancy (26 weeks) might be cheaper to administer than a 6 bed villa with pool & tennis enjoying 10% occupancy (5 weeks). Doesn't sound very commercial to me !