On the 17th October, the proposal for the Government Budget for 2012 was presented bringing a number of alterations to the tax law, which is a reflection of the agreements reached with the Troika and the IMF.
You may remember the major tax law alteration in respect of property taxation in 2003/2004. Amongst such alterations then made, I pointed out the ones regarding Companies with head office outside Portugal and in certain locations (as determined by By-Law 150/2004), and the re-evaluation of the properties in Portugal.
In that , all the property transactions made after December 2003, would be required to submit Form 1 of the IMI, together with the property plans (though some finance department required in addition location plans). Theonus to submit the form 1 was on the tax payer , who had 60 days after the transaction to comply.
The properties were evaluated then (2004) based upon this Form 1 and the property plans. In some cases there would be a visit from the finance department expert who would inspect the property.
Part of the property in Portugal was evaluated from December 2003 onwards under this scheme, and the old Code (Código da Contribuição Predial e do Imposto sob a Industria Agrícola -CCPIIA) was revoked being replaced with a new formula for the calculation of the ratable value.
The 2003 law concentrated the re-evaluation onproperty that was subject to transmission, thus meaning that any property that remained under the same owner, that was not transmitted or altered its structure or constitution, maintained the original ratable values calculated under the old Code (CCPIIA), and frequently with a small ridiculous and unreal value.
The Government’s Budget for 2012 proposes now a re-evaluation of ALL property in Portugal, starting from January 2012. The property plans for such re-evaluation will be supplied by the Council in paper or through a digital version, and the initiative for such re-evaluation no longer remains with the tax payer, but will be up to the Finance Department.
This re-evaluation is intended to embrace all property in Portugal that has not been subject to evaluation under the CIMI Code (i.e. from December 2003) and it will have a big impact in the amount of rates to be paid (IMI).
This evaluation does not require an expert/inspector to be present in every process, and the result of this new process will produce effects from the 31st December 2012 onwards, raising the annual rates (IMI) in 2013.
Properties that were evaluated under the terms of the old Code (CCPIIA), and that have a reduced ratable value at present, may expect to have higher ratable values based upon the age, location and quality of the property, increasing in some cases, tremendously the tax burden.