Understanding the Review of the Council Tax System in Portugal Published on 25 Jun, 2012 by Sandy Barreiros / Google+
The council tax system in Portugal has always been complicated, and an area that you need to understand if you intend to own property in Portugal. There are several different proposed changes to the current tax valuation of a property. During the 2012 Portuguese budget, the reviews and changes will be outlined and discussed.
The reforms on council tax charges which were established in 2003 need to be assessed and re explored as part of the new systems, which are being put in place. The original system which was established in 2003 allowed a 10 year period to achieve the review. This revaluation of all taxes connected with property in Portugal is now long overdue.
There have been several alternations to the original IMI code, which regulates the revaluation of urban property throughout Portugal. One of the largest changes has been to the body, which is responsible for achieving the revaluation of all of the properties. Since January 2012, all of the previous rules which applied to how property was valued have been revoked.
All properties which have not been revalued since January 2004 will now undergo a complete revaluation. The new system will be operated by the Finance Department, which has been assigned by the Portuguese authorities. All property plans will need to be forwarded by email, or by hand to the new departments for them to assess the value of the property.
This new system is hoping to ensure that all properties are revalued, and the need to visit every property is not necessary. The new calculated value of the property will come into effect on 31st December 2012. Providing people with several months before taxes are due in 2013, however, some people are not happy.
There will be several changes to the existing formulas for working out the tax and value of the property. These are still being discussed; however, they will be in place and ready to use by November 2012. The new values will be posted to people by registered post; however, electronic notifications are preferred.
Property owners will have 30 days to appeal the new valuation of their property, which will cause a second valuation to be performed. However, this will cost €204, which will need to be paid during the appeal process. Therefore, unless the property owner is certain there has been a mistake, this can be too costly for many people.
The new system cannot be easily explained due to the complex way that the ratable value has been calculated in the past. In previous years, the amount of council tax, which needed to be paid was often calculated depending on the amount that could be reached through renting the property. However, this system was not the best, which is why the government has called for the new system to be introduced.
The new system uses several different formulas to calculate the amount which needs to be paid. Several criteria will need to be looked at, and these will all be used to calculate the value of the property. Location, quality of construction, size and age will need to be observed, as well as local amenities, and other properties in the area.
The location of the property is considered to be one of the most important factors when deciding the value and many areas throughout Portugal will benefit. Every area in the country has been given a coefficient, and areas with higher co-efficient ratings will need to pay more tax. Therefore, properties of the same size will no longer automatically be worth the same amount.
The Financas throughout Portugal have not been able to keep up with the valuations on all properties, and many have gone several years with no revaluation. New properties, and houses that have been recently sold have been valued, however, older properties where the owner has been living for generations have been ignored.
Properties that have been registered with the same family for years, which have not had a revaluation will be receiving a dramatic increase in their taxes. Another factor that people need to consider is that the system of capping the amount of tax, to prevent people suffering will now be removed. This will cause many people to panic as they will now have to pay taxes.
There is another form of capping system, which has been applied, so for some people there is still an option to avoid the high taxes. However, this capping is only valid for the periods of 2012 and 2013, therefore, after this period property owners could find themselves struggling to pay. As with all new legislation, it will take time for people to adjust.
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Published in Taxation