Portugal: The extraordinary contribution on local accommodation (CEAL) has been revoked
Decree-Law no. 57/2024, of 10 September, revokes the extraordinary contribution on local accommodation (CEAL) and adjusts the taxation of capital gains resulting from the transfer of properties intended for own and permanent housing, as well as the taxation of rental income resulting from the lease of properties allocated to the same purpose.
The revoke of CEAL contribution, which had been approved by the previous Government under the Mais Habitação (More Housing) Program, is executed in the context of the new Government's program, which had promised to eliminate measures that considers as penalising local accommodation and limiting property rights and private initiative. It is also revoked the coefficient of ageing (of 1) that had been approved by the same Programme, to be taken into account when assessing the Municipal Property Tax (IMI) due on buildings that, wholly or partially, constituted local accommodation establishments.
These two measures will become effective on 31 December 2023, following the publication of Declaration of Rectification no. 34/2024/1, of 13 September, which means that CEAL contribution will no longer be assessed for the year 2024, and IMI for the same year will no longer be based on the aforementioned coefficient of ageing, but will once again vary according to the age of the building. Consequently, we anticipate that the Portuguese Tax Authority will make the corresponding adjustments in favour of the respective taxpayers regarding the IMI instalments already assessed and paid in 2024 concerning 2023.
Please note in this respect that Order no. 30/2024-XXIV of the Secretary of State for Tax Affairs postponed by 120 days the obligations to submit and pay the CEAL for 2023, which should have been originally fulfilled by 20 and 25 June 2024, respectively.
In addition, the period for proving that the property was used as a permanent home is reduced from 24 to 12 months, excluding exceptional circumstances, for the purposes of applying the reinvestment regime applicable for taxing respective capital gains under Personal Income Tax (IRS).
Lastly, rents costs regarding own and permanent housing can now be offset against the rental income derived from housing leases, up to the limit of that income, if, cumulatively, (i) the property that generates such rental income has been used as own and permanent home of the taxpayer or their household for, at least, 12 months prior to the lease, (ii) the new tax residence is more than 100 kilometres from the leased property and (iii) both lease contracts were registered in the Portuguese Tax Authority’s website.
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