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Homes Lacking Updated Property Registry Risk Increased AIMI

15 September 2017

Properties whose owners are not identified on the registry will pay the IMI surcharge based on the corporate rate. Therefore, they will not receive the €600,000 exemption. Taxpayers can still update their registries

In addition to corporate and individual taxation regulations, the IMI surcharge includes a “special payments” section for properties whose registry only includes the registration number and not the owners’ fiscal identification. In these cases, the tax rate applied will be 0.4% and there is no €600,000 exemption, even if an individual owns the property. Taxpayers can request an update to the registry to avoid the additional charge, but tax specialists consider the tax itself illegal.

“Situations in which the owners’ fiscal identification is not included in the registry, showing just the previous registry number, will be treated according to the rules governing the taxation of corporate entities,” states an explanatory note on the IMI surcharge prepared by the Tax and Customs Authority. Thus, “a rate of 0.4% shall apply to the sum of the equity value of the property, without any deduction to that taxable amount.”

Among the more than 211,600 AIMI assessment notices sent by the tax authorities, 74,289 included the owner’s tax identification (NIF) and were therefore calculated using the rules applicable to each one (companies, singular and undivided inheritances). But there are more than 173,000 that were extracted from the entries that do not have the NIF, and only have the name of the owners, DN / Dinheiro Vivo reported.

For the former Secretary of State for Tax Affairs Rogério Fernandes Ferreira, this payment scheme, in which legislators “require that tax assessments be executed according to the rules applicable to corporate persons”, may “violate the constitutional principles of equality and ability to contribute.” In other words, taxing individuals at a higher rate can be understood as “a sanctioning measure”, which “does not conform to the rule of law.”

Another tax specialist consulted by DN / Dinheiro Vivo also considers that the taxation may be impermissible. “This is an arbitrary situation that is likely to harm tens of thousands of taxpayers, constituting a real tax penalty,” he said. Is that, even if the NIF does not appear in the registry (and therefore the computer system does not automatically distinguish which properties belong to individuals and which to companies), the existing information could permit the government to make that distinction and avoid applying corporate tax rates to people. The AIMI rate for private individuals is 0.7%, but only the rate only applies to property holdings exceeding €600,000. Companies have no exemption and pay a rate of 0.4%.

An official source at the Ministry of Finance told DN / Dinheiro Vivo that if “property owners” correct the registry and identify themselves, the Tax Authority would correct (or cancel) the AIMI tax assessment. The correction will still apply to the current tax charge.

Original Story: Lucília Tiago – Diário de Notícias

Photo: João Girão / Global Images

Translation: Richard Turner