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IMI -Offshore
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UK Guest
IMI -Offshore
A word of warning to owners who re domiciled and are expecting their first IMI invoices. Check them thoroughly. I received mine and it has been calculated at 7%. I have not been able to work out how they arrive at this figure, but at worst it should have been 5%, and best around .05% as I redomiciled in November well ahead of the year cut off for changes.
I have been told to appeal to the tax office and hope they admit the error and issue a correct notice but I expect this to take some time. am not too hopeful.
I have been told to appeal to the tax office and hope they admit the error and issue a correct notice but I expect this to take some time. am not too hopeful.
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UK Guest
IMI and Fiscal Representatives
Never saw this post at the time but this is not untypical of the situation. In our experience around 50% of properties still offshore reecived 5% IMI demands whilst the other 50% received demands at the non offshore rate.
In addition many who "moved" their offshore comanies before the end of 2003 still received a 5% demand as was the case with UK Guest. There is an appeal process which is best undertaken by someone who understands the system.
On another point, the Government recently enacted legislation concerning tax evasion and money laundering. As a consequence the tax departments are reviewing and amending their systems to ensure compliance with an existing law dating back to 2001 which requires all non-resident individuals or companies that hold property in Portugal to appoint a resident fiscal representative.
A practical consequence of these changes is that the tax authorities are often not delivering Municipal Tax demands for the fiscal year 2003 (payable in 2004) to anyone that is not registered as the tax representative of the individual or company.
Equally, actual payment of the Municipal Tax is proving difficult by anyone who is not the fiscal representative. We are finding that with any transaction involving property, the tax department are requesting details of the fiscal representative.
I would advise all non resident property owners, individual or corpoarte to get this sorted by appointing a resident willing to undertake this rather onerous duty sooner rather than later.
In addition many who "moved" their offshore comanies before the end of 2003 still received a 5% demand as was the case with UK Guest. There is an appeal process which is best undertaken by someone who understands the system.
On another point, the Government recently enacted legislation concerning tax evasion and money laundering. As a consequence the tax departments are reviewing and amending their systems to ensure compliance with an existing law dating back to 2001 which requires all non-resident individuals or companies that hold property in Portugal to appoint a resident fiscal representative.
A practical consequence of these changes is that the tax authorities are often not delivering Municipal Tax demands for the fiscal year 2003 (payable in 2004) to anyone that is not registered as the tax representative of the individual or company.
Equally, actual payment of the Municipal Tax is proving difficult by anyone who is not the fiscal representative. We are finding that with any transaction involving property, the tax department are requesting details of the fiscal representative.
I would advise all non resident property owners, individual or corpoarte to get this sorted by appointing a resident willing to undertake this rather onerous duty sooner rather than later.
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Alan
Buying in Portugal
As someone who is considering buying in Portugal, I am becoming increasingly concerned at the apparent mess of legislation, taxes, duties etc. I love the Algarve, and would like to buy somewhere abroad as a part investment and holiday home, but I am beginning to think it might be better to look elswhere. Is there anyone who has bought recently - under the new rules (non-offshore etc) - and is it really worth it? Values seem to have stalled or perhaps dropped, due to the new rules. Is this really the case? It is difficult to get a proper feel of it from the UK and I am coming out soon to have a look for myself, but it would be nice to get a few views from those who have been through the same process recently.
Buying property
Alan
It is not really complicated at all and I think it was only the offshore scene which makes it confusing to you. All you need to do is make sure that checks on title are properly done as you would back in UK.
Outside the offshore scene, the tax situation is simple really. If you don't let you have no need to declare income. If you do then you should declare and pay appropriate taxes.
The costs and taxes on acquisition are fairly simple to calculate.
It is not really complicated at all and I think it was only the offshore scene which makes it confusing to you. All you need to do is make sure that checks on title are properly done as you would back in UK.
Outside the offshore scene, the tax situation is simple really. If you don't let you have no need to declare income. If you do then you should declare and pay appropriate taxes.
The costs and taxes on acquisition are fairly simple to calculate.
Investing
Alan
We have recently sold a property in Cvo. It is offshore and was redomiciled to Malta in November last year. We had it on the market for 8 months and achieved our asking price.
Had I taken notice of the negative hype surrounding the sale of an offshore property I would probably have taken the keys to an agent and asked him to send me a cheque - when and if it sold.
In the end I decided to market it myself to all the people who had rented it and those who enquired and finally sold it to a regular client who is delighted with his acquisition and I am equally delighted with the return on my investment.
The moral of the story - take advice from many sources (Biffa is good), do your sums and get a good Portuguese Lawyer whose English is perfect. if you are planning on renting - take care of it yourself - do not use any booking agency (use a reliable and reputable local manager to take care of it's upkeep) and you too will enjoy an enviable return on your investment.
The rules and regulations are fairly complex but easy to get your head around if you use the advice regarding Lawyers (above). The process works at the same speed as the UK (my experience) - very slow - so what
We have one remaining property and will continue to visit Cvo as often as is possible, with a view to permanent residency in the next 5 years. I recommend The Algarve, particulary Cvo to anybody considering an investment property abroad - the village has oodles of character and an abundance of charm all of which help it to attract repeat business year on year.
Good Luck with your search.
We have recently sold a property in Cvo. It is offshore and was redomiciled to Malta in November last year. We had it on the market for 8 months and achieved our asking price.
Had I taken notice of the negative hype surrounding the sale of an offshore property I would probably have taken the keys to an agent and asked him to send me a cheque - when and if it sold.
In the end I decided to market it myself to all the people who had rented it and those who enquired and finally sold it to a regular client who is delighted with his acquisition and I am equally delighted with the return on my investment.
The moral of the story - take advice from many sources (Biffa is good), do your sums and get a good Portuguese Lawyer whose English is perfect. if you are planning on renting - take care of it yourself - do not use any booking agency (use a reliable and reputable local manager to take care of it's upkeep) and you too will enjoy an enviable return on your investment.
The rules and regulations are fairly complex but easy to get your head around if you use the advice regarding Lawyers (above). The process works at the same speed as the UK (my experience) - very slow - so what
We have one remaining property and will continue to visit Cvo as often as is possible, with a view to permanent residency in the next 5 years. I recommend The Algarve, particulary Cvo to anybody considering an investment property abroad - the village has oodles of character and an abundance of charm all of which help it to attract repeat business year on year.
Good Luck with your search.
TD - very glad to read your positive response regarding property in CVO. We had no problem with the mechanics of buying - we were assisted by an excellent local lawyer recommended on this forum, which has proved an invaluable source of advice (and a good way of making new friends in CVO). We continue to receive excellent help with tax and fiscal matters from Biffa's company. Our game plan is similar to yours - full time residency within 5 years. We visit CVO as often as possible (although not so easy from here) and it is always a wrench to leave. The offshore tax changes were a worry for a while but re-domiciling the company still cost no more than the SISA tax we would have paid on the original purchase - again we benefitted from informed advice. After all the IMI hand-wringing and doom-laden correspondence on the forum it was a breath of fresh air to read a positive contribution that reflects our own experience and feelings about owning property in CVO.
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Alan
Buying in Algarve
Many thanks for the reponses. It makes me feel a bit better. I hope to come out within the next month or so to make a proper assessment.
Perhaps someone could also help re the best way of financing.
I am involved in the property business in the UK - chartered surveyor and a director of a small house building company and property investment company. We are looking into the feasibility of buying in the Algarve as a part investment but also to be used by directors and staff. Is it possible to buy in Portugal in the name of one of our UK companies? We already have a portfolio of of various investment properties in the UK but our accountants/lawyers are not familiar with buying in Portugal. If this is not possible is there a process for such purchases? We would be raising the money in the UK from our own bank, using existing UK securities, and the bank would have a charge on the UK company properties and shares, if needed, thus having an ultimate charge on the Portuguese property. I guess this would be beneficial to us for UK tax purposes, but I do not know if it would conflict with Portuguese tax rules. Someone has told me to set up a subsidiary uk company, and then the company can be sold on, if needed, rather than the property, obviously incurring capital gains tax, but we would not need to draw money out of the companies to buy in personal names, with consequent tax implications. The Algarve property would then form part of our overall property portfolio.
I will be surprised if it this staightforward, but any comments would be appreciated.
Many thanks.
Perhaps someone could also help re the best way of financing.
I am involved in the property business in the UK - chartered surveyor and a director of a small house building company and property investment company. We are looking into the feasibility of buying in the Algarve as a part investment but also to be used by directors and staff. Is it possible to buy in Portugal in the name of one of our UK companies? We already have a portfolio of of various investment properties in the UK but our accountants/lawyers are not familiar with buying in Portugal. If this is not possible is there a process for such purchases? We would be raising the money in the UK from our own bank, using existing UK securities, and the bank would have a charge on the UK company properties and shares, if needed, thus having an ultimate charge on the Portuguese property. I guess this would be beneficial to us for UK tax purposes, but I do not know if it would conflict with Portuguese tax rules. Someone has told me to set up a subsidiary uk company, and then the company can be sold on, if needed, rather than the property, obviously incurring capital gains tax, but we would not need to draw money out of the companies to buy in personal names, with consequent tax implications. The Algarve property would then form part of our overall property portfolio.
I will be surprised if it this staightforward, but any comments would be appreciated.
Many thanks.
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Time for a Pint
Can't help too much on the purchase but if it's company owned in the UK ie your company and used by directors and staff, it will be classed by the Inland Revenue (our lot!!) as a benifit in kind and taxed. This will also incur employers NI. better off buying as an individual or joint individuals which will negate any tax liability on the rent fee visitors. All the best.