Municipal Property Tax

• 1. Tax basis

  IMI is computed over the property tax value (VPT) of urban and rural real estates located in the Portuguese territory.
  
  The VPT is determined by the Portuguese Tax Authority based on the information given by the taxpayer and by the application of different ratios which depend on the type of the property, its localization, state of conservation and facilities. In last 10 years, urban properties were subject to a general review with effects on 31 December 2012.
  
  Is due by the landlord, the usufructuary or the holder of the surface right of the real estate on 31 December of the year that it concerns.

• 2. Rates

  Applicable rates are the following:
  
  - Rural properties: 0.8%;
  - Urban properties: 0.3% to 0.45%;
  - Properties held by entities resident in blacklisted jurisdictions: 7.5%.
  
  Each municipality determines, on an annual basis, the applicable IMI rate within the mentioned ranges. Municipalities, by resolution of the municipal assembly, can fix a reduced rate to buildings for permanent residence of the owner, based on the number of dependents therein living. The reduction rate may be up to 20% in the case of one dependent, 40% in the case of two, and 70% in the case of three dependents. The tax rates applicable on urban properties are triplicated when they are empty or tumbledown for more than one year.

• 3. Payment

  IMI is paid in the following year that it concerns, in one, two or three instalments depending on the amount to be paid:
  
  - Amounts up to € 100 – 1 instalment in May;
  - Amounts from € 100 to € 500 inclusive – 2 instalments in May and November;
  - Amounts exceeding € 500 – 3 instalments in May, August and November.

• 4. Exemptions

  There is a large list of exemptions that includes, amongst others:
  
  4.1 Urban property used as a permanent place of residence (owned or rented)
  This exemption should be requested within 60 days from the end of six months deadline following the acquisition of the property or its construction or renovation. Applies to individuals which obtained a taxable income, in the year prior to the acquisition/construction, lower than € 153,300, and is valid for three years.
  
  4.2 Urban property subject to rehabilitation
  The exemption applies to urban properties subject of urban rehabilitation, located in urban rehabilitation areas or urban properties built more than 30 years ago, for a period of 3, renewable for a period of 5 years, counted from the date of (ii) issuance of the municipality’s license or (ii) completion of the rehabilitation works, which are intended for lease for permanent abode or main permanent abode.
  
  AIMI is due by individuals and corporations, as well as by structures or collective entities and undivided inheritances, that are owners, usufructuaries or have the surface right of urban properties located in Portugal.
  
  Urban properties classified as "trade, industry, or services" and "others" are excluded from AIMI.
  
  The taxable basis corresponds to the sum of the VPT of all the urban properties held by each taxpayer, reported as at 1 January of each year.
  
  In case of individuals and undivided inheritances a deduction of € 600,000 to the taxable basis is foreseen. Married or living in non-marital partnership taxpayers, who opt to submit a joint tax return, have the right to deduct € 1,200,000 to the sum of the VPT of all the urban properties.
  
  The applicable rates, after deductions provided, are as follows:
  
  - 0,7% for individuals and undivided inheritances;
  - 0,4% for corporations; and
  - 7,5% for urban properties owned by entities located in tax havens.
  
  In case of individuals, (i) to the taxable amount of more than € 1,000,000 and equal or lower than € 2,000,000 (or the double for married or living in non-marital) a marginal rate of 1% applies, and (ii) to the taxable amount that exceeds € 2,000,000 (or the double for married or living in non-marital), a marginal rate of 1.5% applies.
  
  In the case of urban properties owned by corporations, for the personal use of the shareholders, members of the board or of any administrative bodies, management or supervision, are applicable the rates considered for individuals.
  
  AIMI is assessed by the Portuguese Tax Authorities in June of each year, being the respective payment made in September.