The "Mais Habitação" ("More Housing") program, Law No. 56/2023, was published on October 6th in the Official Gazette and came into effect on October 7th.
Here is a summary of the main changes to legislation in the Local Accommodation sector, with a particular focus on apartments and lodging establishments integrated into an autonomous fraction of a building in Local Accommodation, as this is where most changes will occur. Villas remain exempt from the CEAL, and new Local Accommodation registrations continue to be allowed.
Increase in IMI (Property Tax):
The obsolescence coefficient will now always be 1, resulting in an increase in the IMI value in the majority of cases. The IMI calculation is based on applying a rate (between 0.3% and 0.45%) to the Taxable Asset Value (VPT). One of the parameters used to calculate the VPT is the obsolescence coefficient, which decreases as the property ages. As the house gets older, the obsolescence coefficient decreases - a property with less than two years has a coefficient of 1, while properties between 9 and 15 years have a coefficient of 0.85.
Extraordinary Contribution on Local Accommodation (CEAL):
The CEAL rate is applied to residential properties that are autonomous fractions or parts capable of independent use of buildings in total ownership, registered in the National Register of Local Accommodation (RNAL) by December 31, 2023. Under the organized accounting regime, this tax is not fiscally deductible for IRS/IRC (individual or corporate income tax). It is calculated through a complex formula not officially explained by the government, involving coefficients that have not been properly presented yet. Excluded from CEAL are properties located in interior territories, primary residence Local Accommodations (AL) with an exploitation period not exceeding 120 days per year, and properties in certain eligible parishes, particularly those in municipalities where a housing shortage has not been declared. CEAL is not fiscally deductible for IRS/IRC under the organized accounting regime.
License conditional on condominium decision:
The condominium assembly, by a decision of at least 2/3 (two-thirds) of the per mille of the building, can oppose the operation of Local Accommodation, except when the constitutive title expressly provides for the use of the fraction for Local Accommodation purposes or there has been an explicit resolution of the condominium assembly authorizing the use of the fraction for that purpose. The cancellation will only take effect within 60 days after sending the resolution to the President of the respective Municipal Council. For properties located in territories where the registration of new Local Accommodations remains in force (interior regions, autonomous regions, municipalities where a housing shortage has not been declared, or properties included in the Revive Nature Fund), prior approval of the condominium becomes mandatory.
Expiration of Inactive Registrations:
Local Accommodation registration holders must, within 2 months from the effective date of Law No. 56/2023 on October 7, 2023, provide evidence of the maintenance of business activity by submitting a contributory declaration demonstrating the effectiveness of the business activity. This proof must be submitted through the Electronic Single Counter platform, attaching the latest income tax return for IRS or IRC purposes or the last periodic VAT return, referring to the Local Accommodation business activity. If it is an activity registered in 2023, the VAT return or, if not available, the activity start declaration to the Tax Authority should be submitted. At present, the necessary updates have not been made to the Electronic Single Counter platform to allow this activity proof. If business operators do not provide this proof, the Local Accommodation license will be canceled. This does not apply to the operation of Local Accommodation units in the primary and permanent residence, provided that this operation does not exceed 120 days per year.
Reassessment of Existing Registrations:
Local Accommodation registrations issued by October 6, 2023, will be subject to reassessment during the year 2030, becoming renewable for 5 (five) years from the first reassessment. The Local Accommodation registration number is personal and non-transferable, expiring in the event of a transfer, except in cases of succession. In the case of properties under the Local Accommodation regime acquired with financing whose contract was concluded by February 16, 2023, if the amount has not yet been settled by December 31, 2029, the registration renewal will only take place after full amortization.
Suspension of Registrations:
The issuance of new Local Accommodation registrations in apartments and lodging establishments integrated into an autonomous fraction or building on the Portuguese coast is suspended. Local Accommodation registrations located in interior territories, autonomous regions, municipalities where a housing shortage has not been declared, or properties included in the Revive Nature Fund are not covered by this measure.
October 31, 2023