Por­tu­gal to in­tro­duce tax on real es­tate for­tunes

Kuwait Times - - BUSINESS -

Por­tu­gal will in­tro­duce a tax on real es­tate for­tunes above 600,000 eu­ros ($661,000) in 2017 to help pay for pen­sions, the govern­ment has said. The tax, fiercely op­posed by the real es­tate sec­tor which fears it will put the breaks on for­eign in­vest­ment, was in­cluded in So­cial­ist Prime Min­is­ter An­to­nio Costa’s draft bud­get for 2017. “The tax­a­tion of large real es­tate for­tunes will en­hance the sus­tain­abil­ity of our so­cial se­cu­rity sys­tem and con­trib­ute to fis­cal jus­tice,” he told par­lia­ment Fri­day.

If the value of all real es­tate owned by a tax­payer sur­passes 600,000 eu­ros ($661,000), a levy of 0.3 per­cent will be ap­plied to the amount above this thresh­old, ac­cord­ing to the draft bud­get.

The govern­ment ex­pects the mea­sure will raise 160 mil­lion eu­ros ($176 mil­lion) each year. “The tax­a­tion of real es­tate for­tunes will make it pos­si­ble to raise pen­sions,” said Cata­rina Martins, a law­maker with the far-left Left Block party which backs the mi­nor­ity So­cial­ist govern­ment.

The thresh­old of 600,000 eu­ros will spare most ben­e­fi­cia­ries of the coun­try’s so-called “golden visa” scheme, which has helped fuel de­mand for real es­tate among wealthy for­eign­ers from out­side the Euro­pean Union. Cash-strapped Por­tu­gal in Oc­to­ber 2012 started of­fer­ing “golden” visas to non-EU ci­ti­zens will­ing to in­vest 500,000 eu­ros in prop­erty, make a cap­i­tal trans­fer of one mil­lion eu­ros or cre­ate 10 jobs. The Por­tuguese visas al­low for­eign­ers to travel within Europe’s 26-coun­try Schen­gen free trade zone with­out re­stric­tion. Por­tu­gal has is­sued nearly 4,000 “golden” visas that have gen­er­ated in­vest­ments of 2.37 bil­lion eu­ros since the scheme was launched at the end of 2012, most of them to Chi­nese, Brazil­ians and Rus­sians.

‘Un­prece­dented fis­cal at­tack’

The As­so­ci­a­tion of Lisbon Home­own­ers (ALP) crit­i­cized the new tax, calling it an “un­prece­dented fis­cal at­tack against the real es­tate sec­tor”. The mea­sure will also af­fect for­eign buy­ers who have flocked to Por­tu­gal to take ad­van­tage of tax ex­emp­tions granted to Euro­pean re­tirees who move for the first time to the coun­try. French na­tion­als ac­count for 27 per­cent of all for­eign real es­tate buy­ers, fol­lowed by Bri­tons who ac­count for 18 per­cent.

“With this mea­sure, the govern­ment has shot it­self in the foot. Por­tu­gal can’t con­stantly change the rules of the game,” added Hen­rique Moser, a lawyer with the Telles law firm which spe­cial­izes in real es­tate. The govern­ment also de­cided to raise its tax on home rentals for tourists, which have up un­til now been lower than those ap­plied to long-term rentals. The mea­sure comes as home rental web­sites such as Airbnb have seen their busi­ness soar in Lisbon and other Por­tuguese cities.

The num­ber of peo­ple who have stayed in ac­com­mo­da­tion in the Por­tuguese cap­i­tal has dou­bled to 433,000 in 2015 from 213,000 the pre­vi­ous year. Costa came to power in Novem­ber 2015 af­ter his party teamed up with the Com­mu­nists and Left Block to oust a cen­tre-right ad­min­is­tra­tion.

The tiny left­ist par­ties did not for­mally join the new govern­ment, but Costa re­lies on them for a ma­jor­ity in par­lia­ment to pass leg­is­la­tion.

—AFP

LISBON: Por­tuguese Finance Min­is­ter Mario Cen­teno (R) ar­rives for the pre­sen­ta­tion of the Por­tu­gal’s State Bud­get 2017 at the Por­tuguese Finance Min­istry in Lisbon on Fri­day.

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