ASAE clampdown on illegal rentals

[widge]

Does anybody know if this is still going on ??????


"The entire country has seen several inspection actions taking place, and obviously the Algarve has been by far the main target considering the fact that the region sports thousands of holiday homes which are in high demand at this period of the year.

The aim of the inspections is to clamp down on privately owned rooms or villas that are being let without being licensed under the Alojamento Local regime.

During last year, a total of 103 inspections took place and in 35 of them, infractions were detected. So far in 2013, 78 inspections have taken place and 26 infractions recorded, so this means that one-third of the rentals are illegal. Keep in mind though that only half of the summer season has gone in the Algarve, so more inspections are expected to take place before the end of this year’s season.

ASAE mentioned that the inspections are both ‘reactive’ and ‘proactive’, which means that they are carried out both from an annual programme of actions as well as a result of investigations, complaints and denunciations."

[sunman]

You might be on to something here Señor Widge, I suspect the bespectacled men in brown suits might be looking over the walls to ask the folks relaxing by the pool what their relationship to the property owner is as the season takes hold,
http://www.theportugalnews.com/news/tax ... tals/31246

[widge]

Well observed sunman - I am told that they are starting with the villa rental agencies. HMRC are also supplying information to the Portuguese authorities on declared overseas rental income, it's not rocket science really & just a matter of time before evaders are caught.

€300m would no doubt cover the the cost of the abolition of tolls on the A22, enable a reduction in IVA on utility & restaurant bills, fund Faro Airport without Hire car surcharges, repair the N125, fund a proper Algarve tourism campaign, help all the stray dogs & cats the list is endless!

[sunman]

Well observed sunman - I am told that they are starting with the villa rental agencies. HMRC are also supplying information to the Portuguese authorities on declared overseas rental income, it's not rocket science really & just a matter of time before evaders are caught.

€300m would no doubt cover the the cost of the abolition of tolls on the A22, enable a reduction in IVA on utility & restaurant bills, fund Faro Airport without Hire car surcharges, repair the N125, fund a proper Algarve tourism campaign, help all the stray dogs & cats the list is endless!

these are all very good sentiments but I wouldn't rely on the money to come back out from Lisbon too fast once they start collecting it

[widge]

Yet more on this story………...

http://portugalresident.com/tax-man-to- ... l’-renters

[widge]

Update posted by Andy from Algarve Daily News

To the approval of many taxpayers in Portugal, and to the worry of many others, the Tax Authority now is looking carefully for those property owners who run a covert lettings business. Whether it’s a villa for summer lets or a room for occasional paying guests, all properties must be registered and taxes paid.

The taxman is inspecting those involved in renting out their properties and a squad of newly trained staff is focusing both on the market in short-term lets to holidaymakers and is checking that income from long-term lettings are properly being accounted for and taxed.

The taxman is taking the obvious route and is starting by collecting information "from newspaper advertisements and ads on the Internet” but also from water and electricity suppliers contracts to see who has more than one property.

Webites such as HomeAway and AirBnB are now being scanned by trained tax officials to identify those properties in Portugal that are for rent. Simple checks can reveal ownership and the owner's tax payment records.

Fines and retrospective assessments both are likely where apartments and villas have been let and no records have been submitted to the Portuguese tax authorities.

The taxman is now ‘moving from words to deeds’ and undercover tax inspectors are posing as potential renters of properties to see what is on offer and whether owners are trying to stay below the tax radar.

The tax inspectors are keen now to for those longer-term rental contracts which should be registered at Finanças but somehow owners never got around to it.

The Alojamento Local registration system for holiday lets leaves many Portuguese property owners who let a room on a casual basis to top up their pension, unable to comply without disproportionate expense and hence are operating illegally.

The availability of many types of casual lets, which suit certain market sectors, is contracting rapidly to the detriment of the Algarve as a flexible, responsive and inclusive holiday destination.

[sam]

We don't rent, but recently revisited the possibility. So
1) we would have to spend thousands of euros on works, certificates etc just to get the licence.
2) would we get enough rentals and enough income to warrant to extra work and wear & tear.
3) As there are so few allowances you end up paying tax on tax. Say I spent 100euros on something that was not allowable, IVA is at 23% making cost 123 euros. As I would then have to pay 28% tax I would have to take in 171 euros to break even. So I would have spent 100 euros on an item/service and paid 71euros tax. So, the tax rate on that item is 71%
So, its a no brainer - it is not worth us renting out our apartment. We will just carry on using it ourselves. Empty periods will stay empty. We enjoy our holiday home without the extra hassle and expense. The area and the authorities lose out on income/taxes that would be generated from income to us and the local economy.

[pato]

Pay your tax in the UK, you can't pay tax in two European countries.

[e-richard]

Get your facts right Pato.
That is dangerously unsound advice from a non-accountant.

[pato]

Get your facts right Pato.
That is dangerously unsound advice from a non-accountant.

An explanation would be helpful, that's how I've been advised, declare any revenue and pay uk tax. nothing to do with the problem of letting. What are the facts then?

[joeysoap]

Get your facts right Pato.
That is dangerously unsound advice from a non-accountant.

Agree with e-richard on this one Pato

Your first tax Is due in Portugal, the balance (if any) is in the UK. The tax rate in Portugal is 28% (unless you go down the road Widge explained)so if your UK Tax is higher you pay the difference in the UK (if its less you don't get a refund, unfortunately, the Portuguese rate stands)

We don't rent, but recently revisited the possibility. So
1) we would have to spend thousands of euros on works, certificates etc just to get the licence.
2) would we get enough rentals and enough income to warrant to extra work and wear & tear.
3) As there are so few allowances you end up paying tax on tax. Say I spent 100euros on something that was not allowable, IVA is at 23% making cost 123 euros. As I would then have to pay 28% tax I would have to take in 171 euros to break even. So I would have spent 100 euros on an item/service and paid 71euros tax. So, the tax rate on that item is 71%
So, its a no brainer - it is not worth us renting out our apartment. We will just carry on using it ourselves. Empty periods will stay empty. We enjoy our holiday home without the extra hassle and expense. The area and the authorities lose out on income/taxes that would be generated from income to us and the local economy.

we don't rent either Sam, came to the same conclusions you have, plus even at 28% you may not be finished with the taxman, as your marginal rate at home is the one that applies less the Portuguese tax paid.

[widge]

Get your facts right Pato.
That is dangerously unsound advice from a non-accountant.

An explanation would be helpful, that's how I've been advised, declare any revenue and pay uk tax. nothing to do with the problem of letting. What are the facts then?

Time to get a new advisor & hope that the Portuguese tax authority don't come after you after admitting publicly that you've inadvertently been avoiding tax. You're not alone & at least you've made a declaration unlike many who simply bank the rent and hope they never get caught.

Holiday rentals is a business, which in many cases, attracts tens of thousand of euros a year for each property & has to be accounted for like any other business. The growth in "on line" marketing via Tripadvisor & the like means many sales are transacted via the internet in UK £'s & the money goes direct to the owners UK bank. Some believe that this exempts them from the Portuguese authorities all together & that tax, licensing & Insurance is optional. This is not only illegal but potentially very costly as the Portuguese now cooperate with the UK authorities using data exchange to identify expat owned property which is rented out via web sites and agents.

[sasha1]

How do Google, Amazon and the likes get away with it?

[widge]

When you buy a book on amazon.co.uk, you actually enter into a legal contract with, and pay your money to, Amazon Luxembourg.

One reason is under current EU rules (being replaced from 2015), if you buy an ebook from Amazon, it is the Luxembourg VAT rate of only 3% that you end up paying.

Differences in VAT between countries also encourage the equivalent of booze cruises to Calais.

Internet companies like Google etc. domicile their businesses in low corporation tax countries like Ireland to avoid paying UK corporation tax. Nothing to stop you doing the same but you might have to leave the UK to do it !

[pato]

Get your facts right Pato.
That is dangerously unsound advice from a non-accountant.

An explanation would be helpful, that's how I've been advised, declare any revenue and pay uk tax. nothing to do with the problem of letting. What are the facts then?

Time to get a new advisor & hope that the Portuguese tax authority don't come after you after admitting publicly that you've inadvertently been avoiding tax. You're not alone & at least you've made a declaration unlike many who simply bank the rent and hope they never get caught.

Holiday rentals is a business, which in many cases, attracts tens of thousand of euros a year for each property & has to be accounted for like any other business. The growth in "on line" marketing via Tripadvisor & the like means many sales are transacted via the internet in UK £'s & the money goes direct to the owners UK bank. Some believe that this exempts them from the Portuguese authorities all together & that tax, licensing & Insurance is optional. This is not only illegal but potentially very costly as the Portuguese now cooperate with the UK authorities using data exchange to identify expat owned property which is rented out via web sites and agents.

I don't advertise at all, only friends stay, I declare any money I receive and pay tax on it, no cash at all, my company chartered accountant is looking into the situation and I'll post his results for you free of charge on the forum. I want to work within the law and I always have, the peanuts I get from the villa are soon eaten up by the cash gobbling monster that it is.
. Don't accuse me of inadvertent tax evasion, that's a dangerous statement for you to make.