Everything you need to know about deadlines, fines, exemptions and how to calculate, and in spite of the coronavirus crisis, the rules remain unchanged.
The payment of IMI (Municipal Property Tax) in Portugal began in early May. Despite this atypical period that we're experiencing, generated by the COVID-19 pandemic, the government has already indicated that there will be no postponement of payment of this tax. The good news is that more than 40 municipalities have decided to reduce the IMI tax for the year 2019. Therefore, it is important to be aware of all the deadlines and how much you will have to pay.
IMI is updated and charged annually to the owners of real estate or land by the respective municipalities where they are registered. Although it is collected by the central services of the "Direcção-Geral dos Impostos" (Directorate General of Taxes), the revenue from IMI belongs to each municipality, and it is up to the Finance Department to deliver the funds to municipalities, thus becoming one of their main sources of funding, explained with the finance experts at Doutor Finanças.
The invoice for the payment of this tax should reach you by post in good time so that you can confirm its value and proceed to its payment. Otherwise, you should request a second copy or obtain the document through Portal das Finanças.
How IMI is calculated
The IMI calculation is simple. You need to know what the "Valor Patrimonial Tributário, or VPT" (Taxable Patrimonial Value) of the property is, as well as the rate that is applied by your municipality, since IMI is levied on the value at which the property is registered with the tax authorities, i.e. the Taxable Patrimonial Value (VPT).
Although this tax is attributed by the municipalities, its value is calculated based on a table issued by the State, thus not allowing municipalities to exceed the following limits imposed:
- Urban properties: between 0.3% and 0.45% (can go up to 0.5% in some cases);
- Rural properties: up to 0.8%.
The data is published on the Portal das Finanças, where you can consult the value of the taxes in all Portuguese municipalities.
The IMI calculation is made by multiplying the VPT (value that is attributed to the property, according to article 38 of the IMI Code) by the IMI rate of the municipality where the property is located, according to the following formula:
- IMI payable = VPT x Municipality Tax
As in other years, this year you will also be able to pay IMI in instalments if the total exceeds 100 euros.
As stated in Article 120(1) of the IMI Code, the deadlines for making the payment of IMI 2020 are the following:
- Up to 100 euros: one time payment, paid in May;
- More than 100 euros and less than 500 euros: two instalments, paid in May and November;
- From 500 euros: three instalments, paid in May, August and November.
If your installment is more than 100 euros, but you prefer to pay all at once, you can also do so. For those who have to pay less than 10 euros, there is no need for any payment.
How to make the payment
There are several ways to pay this tax. You can do it at a tax office (in person or online), at a CTT office (the post office), an ATM or a financial institution that has a protocol with the Portuguese tax authorities.
This payment can be made by cash, cheque, direct debit or bank transfer. Given the current pandemic scenario, it is advised that you to do it from your home via online banking if possible.
What are the fines for delay
In the scenario of late payment, there are several less pleasant aspects that can arise: interest on arrears and seizure amongst other outcomes. In the first place, if you do not pay the tax within the legally established time limit, and in accordance with article 44 of the General Tax Law, interest on arrears is due. The applicable rate of interest on arrears is that defined in the general law for debts to the State and other public entities, and is fixed annually. For 2020, the defined value is 4.786%.
Interest on arrears is also added to the charges due in the process.
If you do not voluntarily pay the missing tax (i.e. within 30 days of notification), your property can be seized and sold judicially by the State.
IMI exemptions in 2020
The IMI code and the Tax Benefits Statute include several reductions and exemptions for property owners who meet certain requirements.
In 2020, you can benefit from an IMI exemption in the following situations:
- Permanent exemption from IMI: intended for low-income households (up to 15,295 euros per year), whose property is only intended for permanent owner-occupied housing, and the value does not exceed 66,500 euros;
- Temporary exemption from IMI: with a duration of 3 years, destined to those who do not have an income higher than 153,300 euros per year and who buy a property with a value up to 125,000 euros;
- Properties destined for renovation are also entitled to IMI exemption, between 3 and 5 years.
Regarding the discounts on the value of IMI, these depend on the municipalities. In some municipalities, the following situations may occur:
- Leased urban properties: 20% reduction (art. 112, no. 7 of IMI Code);
- Properties of energy class A or higher, or whose class has increased two classes after improvement works may have a 25% discount in IMI, for 5 years (art. 44-B of EBF);
- A 30% discount in IMI, applicable in areas that are subject to urban regeneration or combating depopulation (art. 112, no. 6 of the IMI Code);
- Discount of 50% in IMI in buildings for the production of energy from renewable sources (art. 44-A of the EBF);
- Buildings of public interest, with municipal value and cultural heritage, may apply a 50% discount in IMI (art. 112, no. 12 of the IMI Code);
- Discount for each child (Family IMI): depending on the municipalities, there may be a reduction in IMI in urban properties, intended for private and permanent housing. The reduction will be 20 euros for those who have 1 child, 40 euros in the case of 2 children and 70 euros for those who have 3 or more children (art. 112-A of the IMI Code).
To apply for IMI exemption you can go to the Departamento das Finanças nearest to your area of residence, but in the current context of a pandemic it is best to do everything directly on the online portal where all of the options are available.