Changes to the reporting of letting income

[biffa]

All to do with volume of accounting work involved.

[widge]

Thanks

[Sheila]

At Sovereign we always felt that reporting under Category B was only an advantage to those with above 20k rental income due to the expenses involved so we opted to continue under Category F. The 28% income tax level was not helpful to that but tax is paid on profit so low or no profit = low or no tax. Now we are forced to move to Category B by the new law.

Why is Category B reporting more onerous and expensive than Category F if you only have to report income?

[Mexican Pete]

Is anyone able to tell me the year from which this "Simplified Regime" will be effective? 2014 or 2015?

May appear a dumb question, but I've not been able to find this critical fact anywhere!

Thanks in advance for any help.

[e-richard]

Is anyone able to tell me the year from which this "Simplified Regime" will be effective? 2014 or 2015?..

Apparently only applies to rental income in 2015 onwards
See other thread on this topic about half way down page 2 Biffa answered this exact question.

[Mexican Pete]

Many thank e-richard,
Hadn't realised that there was a second thread on this topic!

[RichardHenshall]

So, is that the income earned in 2014 but declared to the taxman in Portugal in 2015??

Either way it does seem that we have to provide our local Câmara with evidence that we've registered an atividade under the simplified (or other) regime within 30 days of 27th November 2014.

[Mexican Pete]

Richard,
According to Biffa, (see other thread on this topic) it will be "only effective for 2015" i.e. not for 2014 rentals.

[Mexican Pete]

On the basis that sharing tenants’ personal information with the Portuguese tax authorities would be neither “reasonable” nor “expected”, I believe it may very well be breach of the Data Protection Act to do so. Does anyone else have an opinion?

Also, out of interest, are any of you who hold tenant information on a computer also registered with the ICO under the Act?

[widge]

This all seems a bit OTT.

If you rent your property to a holiday maker you are required to raise an invoice and charge IVA. It is quite reasonable to expect the invoice to be made out to the holiday maker and include their name and home address. I can't imagine that this breaches the Data Protection Act or any other code of confidentiality.

This invoice (you retain a copy) is evidence of rental income & IVA charged which, as I understand it, can be offset against IVA paid on deductible expenses (for which you will need copy receipts made out in your name and holiday rental address).

How else can you evidence how much you've invoiced and received , or paid out in expenses ? Hand over your bank statements ? I doubt that would prove popular.


It's just running a business which is exactly what holiday letting is

[shanagarry]

Peter,

How does that work? - If the property is owned by a non Vat registered UK citizen and the charge is raised in the UK - it will/should not include Vat. Similarly, if they are not UK Vat registered - it's unlikely they will be IVA registered. Is that right?

In the UK the Vat registration threshold is £81,000 - do the Portuguese operate a similar system? If they do - £81,000 is a lot of rental income for a single property - how does that work for IVA?

If an invoice is raised in the UK by a UK resident and it includes IVA and the person is not UK Vat registered and it is paid in the UK - will the individual be taxed on the gross income (that includes the IVA)? When they pay the IVA in Portugal - they will be seriously out of pocket - won't they?

What part of straightforward have I not understood?

[RichardHenshall]

The property being rented is in Portugal so any invoicing is deemed to be done in Portugal, using Portuguese IVA thresholds (€10,000 per year) and rates (6%). It's immaterial that the money may never enter Portugal or that the owner may be resident in the UK.

[widge]

Peter,

How does that work? - If the property is owned by a non Vat registered UK citizen and the charge is raised in the UK - it will/should not include Vat. Similarly, if they are not UK Vat registered - it's unlikely they will be IVA registered. Is that right?

In the UK the Vat registration threshold is £81,000 - do the Portuguese operate a similar system? If they do - £81,000 is a lot of rental income for a single property - how does that work for IVA?

If an invoice is raised in the UK by a UK resident and it includes IVA and the person is not UK Vat registered and it is paid in the UK - will the individual be taxed on the gross income (that includes the IVA)? When they pay the IVA in Portugal - they will be seriously out of pocket - won't they?

What part of straightforward have I not understood?

Tony,

Richard's explanation is how I understand the system to work. I don't recall ever using the term "straightforward" and i think you are confusing a Portuguese enterprise (holiday rental property) with the UK tax rules which clearly don't apply just as you couldn't apply Portuguese tax rules to a holiday rental property in Southend !

[shanagarry]

Thanks for that but what I'm trying to understand is the process for a UK citizen (or any other non-Portuguese) to be IVA registered - if they are not permanently resident in Portugal? Is there a Vat threshold like the UK and can you recover all your IVA if you are registered?

Knowing how complex UK Vat legislation is - I can't imagine the Portuguese system is any less - in fact I suspect it is considerably more

[widge]

Thanks for that but what I'm trying to understand is the process for a UK citizen (or any other non-Portuguese) to be IVA registered - if they are not permanently resident in Portugal? Is there a Vat threshold like the UK and can you recover all your IVA if you are registered?

Knowing how complex UK Vat legislation is - I can't imagine the Portuguese system is any less - in fact I suspect it is considerably more

Yes as already stated the threshold is €10,000 per annum. Why are you confusing people and business ??? A business is a business in Portugal irrespective of the owner's nationality ! If you register your Villa Rental business for category B taxation because your rental income is greater than €10,000 per annum then it's got nothing to do with the fact your a UK citizen or from Outer Mongolia. The question of recoverable IVA has also been covered in previous posts including my own

This invoice (you retain a copy) is evidence of rental income & IVA charged which, as I understand it, can be offset against IVA paid on deductible expenses (for which you will need copy receipts made out in your name and holiday rental address).

Suggest you do your own research or you'll be nagging me for labouring the topic again.