If you have property to rent, this article is important for you to be aware of the obligations of landlords towards the Portuguese Tax Authority.
Firstly, the landlord has the obligation to notify the Portuguese Tax Authority of the conclusion of a lease agreement. This communication is made through the landlord’s «Portugal das Finanças» (the Portuguese Tax Authority’ website) until the end of the month following the start of the lease. Among the elements required are the characterisation of the contract, the indication of the rent and the identification of the property, the landlord and the tenant.
«Imposto do Selo» (Stamp Duty), corresponding to 10% of the monthly rent, is due for the registration of the lease agreement on «Portal das Finanças».
Changes to the lease agreement and its termination must also be notified to the Portuguese Tax Authority.
An increase in the rent is included in the changes to the lease that shall be communicated to the Portuguese Tax Authority. In this situation, «Imposto do Selo», corresponding to 10% of the increase in the monthly rent, is due.
It should be noted that failure to comply with the obligation to notify the rent may lead to the Portuguese Tax Authority initiating administrative offence proceedings, with fines ranging from € 150,00 to € 3.750,00.
On the other hand, the landlord is also obliged to issue electronic rent receipts for the amounts received, even as a deposit or advance on rent.
The value of the rents must also be declared in the IRS tax return. This income (category F) is taxed at a rate of 25%, without adversely affecting the option for aggregation and consequently being taxed at the general IRS tax rates, which vary between 14,5% and 48%. In addition, if the lease contract is valid for more that five years, there will be a reduction in the special rate applicable, with the rate varying between 5% and 15%, depending on the actual extension of the contract.
