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Municipalities’ Financial Independence in the Algarve Linked to Real Estate Taxes
9 October 2017
A statement released today by the Albufeira municipality announced that it ranked in third place in 2016 in a measure of financial independence, according to a study of the Financial Yearbook of the Municipalities, published in “Eco-Economia online.”
That independence is generated, in large part, by IMI and IMT taxes. However, it is worth noting that Albufeira considerably lowered those rates in the last quarter of last year, which gives it the “highest reduction in Portugal medal,” according to the same statement.
The Algarve is represented in the ranking by four municipalities, in the study cited by the “Eco-Economia Online” newspaper, coming in just after the Municipality of Lisbon, which benefits from even greater financial independence. The municipalities of Lagoa and Albufeira appear in the second and third place, respectively. Lagos follows in fourth place and Loulé in the ninth position.
The municipalities assured the publication that this was due to “strict management” intertwined with the results delivered by IMI and IMT taxes, which are the main sources of their revenue and, therefore, the “key to success.”
The characteristics of the real estate market in the Algarve were essential for the financial independence of the municipalities. The figures presented in the ranking reveal how the municipality of Albufeira, as well as the others, have progressively obtained greater fiscal autonomy, derived from revenues that are independent of the Portuguese federal government.
It should be noted, however, that these four Algarve municipalities have reduced the rate on the IMI – Municipal Tax on Real Estate in 2016 and that, despite this decline, Albufeira, Loulé and Lagos are among the municipalities that collect the highest amount revenues with this tax.
Among these, Albufeira came in 15th place and the “highest reduction in Portugal medal”, with a drop of 25.2%, according to the Eco-Economia.
In addition to this decline, the municipalities in question are also among the ones that receive the most revenue from IMT – the Municipal Tax on the Onerous Transmission of Real Estate.
Albufeira took seventh place, even though the municipality made the most significant cuts to the tax.
The constant growth of the Algarve real estate market in recent times is due to a “higher tax value” in the region, says Mariana Gouveia de Oliveira, of Miranda & Associados, a company that acts in corporate law in Portugal. This value results not only from the conditions offered by the region, such as the location but also from the conditions inherent to the type of property in question.
Original Story: Algarve Primeiro
Translation: Richard Turner