Controversy erupted on Monday: Tax authorities are improperly levying the Municipal Property Tax (IMI) on landlords with rental agreements made before 1990, in a “gross violation” of the law, claimed the Lisbon Property Owners Association (ALP). The government stated that the Tax and Customs Authority (AT) “always complies with the law” and “will rectify any non-conformance” if there has been an oversight.
What is at stake?
On Monday, it was reported that landlords with frozen rents (housing rents prior to 1990) who requested IMI exemption are being faced with tax bills for this tax.
The Lisbon Property Owners Association (ALP) also reported to the Ombudsman the “undue collection” by tax authorities of IMI from owners with rental contracts signed before 1990, stating it is a “gross violation” of the law.
“Although these taxpayers are legally exempt from paying this tax, as per the State Budget for 2024 [OE2024], they have been notified to proceed with the payment,” stated the ALP in a letter to Maria Lúcia Amaral.
Possible “Non-conformities” in IMI? Government assures Tax Authority will rectify
“If there was any administrative failure by the Tax Authority, […] I assure that the law is upheld, and therefore, those entitled to IMI exemption will naturally not pay IMI, and the administrative situation will be rectified if there is any non-conformance,” stated Finance Minister, Joaquim Miranda Sarmento, on Monday, speaking at the Eurogroup meeting in Brussels.
The Minister indicated that he has already requested information from the AT regarding this issue.
“I often praise the Tax Authority, but it is an entity that surely might have had its flaws. I don’t know if this was the case; we are still investigating,” Joaquim Miranda Sarmento added.
What happens next?
The Tax and Customs Authority will review by the end of June all IMI settlements for which exemption has been requested and adjust or refund the amounts that may have already been paid.
“The AT will review, by the end of June – when the payment period for the IMI ends this year – all settlements including properties for which this exemption has been requested and must apply,” an official source from the Ministry of Finance told Lusa.
In response to Lusa, the official source from the Ministry of Finance noted that, without the information regarding which properties under lease contracts qualify for the exemption, a form for this purpose was made available on the Finance Portal in July 2024.
“The registration of these exemptions is underway, thus it was not possible to consider them in the IMI settlement for the year 2024”, the same official source affirmed, adding that all tax settlements concerning properties for which exemption has been requested and qualify for this tax benefit will be reviewed.
In cases where landlords have already paid the IMI, this review will result in a reduction of subsequent payments or a refund, depending on the situation”.
This issue stems from a provision added to the Tax Benefits Statute (EBF) by the OE2024, which stipulates that “incomes from property taxed under category F, obtained under lease agreements entered into before the Urban Lease Regime (RAU) came into force, are exempt from IMI [for the duration of the respective contracts].
The first installment of the IMI (or only if the amount is less than 100 euros) is traditionally paid during May. However, this year, due to technical constraints affecting the issuance of IMI bills for 2024, the government has extended the payment period for this first installment until the end of June.
