In today’s Official Gazette, October 6, Law No. 56/2023 was published, approving measures in the field of housing and making various legislative amendments.
With the aim of providing a brief overview of the main measures and their fiscal impact, we have prepared this note.
Among the measures included in the legislation comprising the “More Housing” package, those applicable to SHORT-TERM ACCOMMODATION stand out.
The registration of properties for short-term accommodation activities will now have a duration of 5 years, renewable for equal periods. Registrations for short-term accommodation already issued at the time of the entry into force of this legislation remain active and will be subject to reassessment during the year 2030.
Within two months from the effective date of this legislation, owners of short-term accommodation property registrations are required to provide evidence of the continuation of their activity, under the penalty of registration expiration.
On the other hand, the issuance of new registrations for short-term accommodation in the categories of apartments and lodging establishments is suspended nationwide, with the exception of the interior and the autonomous regions.
An Extraordinary Contribution, the CEAL (Contribuição Extraordinária – CEAL), is established at a rate of 15%, applicable to apartments and lodging establishments integrated into autonomous building units dedicated to short-term accommodation as of December 31 of each calendar year.
The CEAL is payable by the holders of the short-term accommodation operating registration, with property owners who are not the holders of the AL registration being subsidiarily responsible for payment.
The CEAL is not applicable to properties located in the interior, nor to properties situated in parishes that meet specific requirements as communicated by municipalities to the Tax Authorities.
The payment of the CEAL is to be made by June 25 of the following year. Therefore, the Extraordinary Contribution for the year 2023 is to be paid by June 25, 2024.
With implications for IRS (Income Tax), the following measures stand out:
Rental income from properties that have been transferred from Short-Term Accommodation is exempt from taxation. The same exemption applies to Corporate Income Tax (IRC) when the landlord is a legal entity.
Reduction in the autonomous taxation rate for residential property rentals. The rate, which was 28%, is now reduced to 25%. The 28% rate remains applicable to non-residential property rentals.
Increase in the reduction of the autonomous taxation rate for residential property rentals intended for permanent residence, applicable to contracts with a duration exceeding 5 years.
Change in the coefficients applicable to determine the taxable income subject to taxation concerning residential rents received in 2023, as part of an extraordinary support for leasing.
Exclusion from taxation of capital gains realized on the sale of land for construction or residential properties that are not the taxpayer’s own permanent residence when the proceeds, minus any outstanding loans, are used to repay a loan taken for the acquisition of the taxpayer’s own permanent residence or that of their descendants.
This exclusion applies to transactions carried out between January 1, 2022, and December 31, 2024.
Definition of a minimum period of 24 months for the use of the property as the taxpayer’s own permanent residence, so that the capital gain realized upon its sale can benefit from the reinvestment regime.
The reinvestment period is suspended during the years 2020 and 2021.
The reinvestment regime is not applicable to those who have benefited from it in the year of the property’s sale or in any of the three preceding years.
The entry into force of this decree takes place on the day following its publication, namely, on October 7.
These and other measures will be subject to a detailed analysis in the training session scheduled for the end of November.
Mr. Rui Gonçalves, Tax Consultant at APECA.