ASAE clampdown on illegal rentals

[widge]

Don't accuse me of inadvertent tax evasion, that's a dangerous statement for you to make

Not really pato, you wrote it yourself I was just trying to correct your misapprehension that not declaring rental income in Portugal was Ok, it's most definitely not. No charge for that either

[steve]

The tax position is quite clear. Any income received in respect of rental of a villa in Portugal be it by formal or informal arrangements is liable to tax in Portugal and must be declared to the Finanças. If you are UK tax resident you then have to declare the income to HMRC but you can offset any tax paid in Portugal against tax due in the UK. As some one said earlier if your accountant does not share the same view it is time to get a new accountant.

[pato]

It appears I've paid tax in the UK for 25 years and it should have been paid to Portuguese authorities, The UK will refund the difference between the two countries demands and I'll pay them off, I'll take the opportunity to sort out all the legalities required by Portuguese law, we're in touch with a Lagos company who will hope fully know all the answers, thanks to all for your advice.

[widge]

Good luck pato, hope it doesn't prove to be too costly. One less thing to concern you in your retirement.

[pato]

Good luck pato, hope it doesn't prove to be too costly. One less thing to concern you in your retirement.

I was hoping to make a few bob on the deal.

[e-richard]

I was hoping to make a few bob on the deal.

Given that the tax rate in Portugal over most of that period was only 15% on rental income, there is a good chance you will come out ahead, but probably lose all your profits to accountants fees !

[steve]

It makes a refreshing change for someone to admit that they got it wrong. Hats off to Pato for that. Some people just pay tax in the UK and ignore their obligations in Portugal. Others say they pay tax in the UK but don't pay in either country. Hopefully the new clampdown will flush a few of these out. It is not difficult if the tax authorities take the matter seriously.
I hope you get your situation sorted out. The only fly in the ointment might be penalties and interest which HMRC will obviously not offset against UK tax but perhaps the IRS will offer you a deal. There was an amnesty last year but I think that this has now expired.

[widge]

If you got caught with ten years of arrears in unpaid tax and without any proper books or accounts it could get very very messy. If you're represented by an agent in Portugal they can get drawn into the investigation too !

[pato]

I was hoping to make a few bob on the deal.

Given that the tax rate in Portugal over most of that period was only 15% on rental income, there is a good chance you will come out ahead, but probably lose all your profits to accountants fees !

I'm only joking about the making a few bob idea, I believe I pay the tax in Portugal and request a refund from the UK for the difference, no doubt I'll be the loser, we'll have to wait and see.

[pato]

It makes a refreshing change for someone to admit that they got it wrong. Hats off to Pato for that. Some people just pay tax in the UK and ignore their obligations in Portugal. Others say they pay tax in the UK but don't pay in either country. Hopefully the new clampdown will flush a few of these out. It is not difficult if the tax authorities take the matter seriously.
I hope you get your situation sorted out. The only fly in the ointment might be penalties and interest which HMRC will obviously not offset against UK tax but perhaps the IRS will offer you a deal. There was an amnesty last year but I think that this has now expired.

Thanks! I've never set myself up to think I can't make a mistake, I've made many in the past and owned up to them, I never make the same mistake twice though and that's the saviour.

[pato]

What's the cost of a letting licence?

[widge]

If you don't advertise and only let to friends then i wouldn't bother as the cost is anything from € 500 to €3000 depending upon the state of your electrics, gas and building plans etc. If, however, your friends might want to make a claim on your insurance if "little Johnny" slips & breaks his leg, then you're "fu@@ed"cos your illegal and uninsured.

[e-richard]

Widge, are you sure of that?
When I last searched out insurance (only 2 years ago), there was no requirement from any of the insurance companies for any license.
They were happy to offer cover including guest damage and damage to guests (my paraphrasing) even though I then had no tourist licence.

I no longer rent, so I could be out of date a bit, and of course, I had no reason to test the insurance.

[widge]

Thought this very comprehensive description would help all those out there without a licence. The consequences of renting without one are also well covered.

Owning and Letting Holiday Accommodation in Portugal
Information on renting out property for short-term lettings; including rules and regulations, eligibility, how to register and what documentation is required...

Owners of property in Portugal can rent the property for short-term lettings (according to Portuguese bylaw 517/2008 that regulates Decree 39/2008), however the industry is regulated.

Owners must register their properties with the Town Hall (Câmara) as a Local Accommodation Establishment (Estabelecimento de Alojamento Local) and receive a habitation permit.

"Local Accommodation" includes villas and apartments that don't fulfil the requirements necessary to be considered a tourist development, but whose owners provide temporary accommodation in return for payment.

The villas and apartments classified as Alojamento Local must meet the legal requirements for safety and hygiene. Only registered and licensed villas or apartments may be advertised as local accommodation (for short-term rentals or seasonal rentals) by their owners, travel agencies or tourist offices, and they must be advertised as "Alojamento Local" or "AL".

Legal Requirements
The exterior and interior of the building must be well-maintained and in good condition
The premises must be connected to the mains water supply or have a private, controlled water system
The premises must be connected to the mains sewer system or have a septic tank that has the capacity to handle the wastewater created if the property is at maximum capacity
Cold and hot water must be available
The bedrooms must have good ventilation and air circulation provided by a window or other access to the exterior of the building
The premises must have furniture and appropriate equipment and utensils
Windows should have a system for preventing the entry of light
Doors must have locks or a similar system that affords guests privacy
One bathroom must be provided for every three bedrooms, and include a sink, bath or shower with a lock
Guests must be advised of the rules of the property by the operators of the Alojamento Local
An official Complaints Book (Livro de Reclamações) must be kept on the premises and be available at all times
Insurance

All property must be insured. Under legislation, all property requiring a rental license must produce the gas and electricity certificates. Gas inspection certificates must be renewed every five years; house insurance is void for fire or explosion if no current certificate is in place. Should there be a claim and it is deemed by the insurance company that the property is not up to standard, then the likelihood is that there could be a reduction, or refusal, of settlement. Insurance companies recommend that a "Tourist Letting" rider be included on a policy.

Note: Public liability insurance does not necessarily cover paying guests although it does cover non-paying guests. Ensure the proper insurance is in place to cover injury or damage to paying guests and their property.

Hygiene requirements

The guest rooms and linens must be cleaned at least once a week and when a new guest arrives.

Safety requirements

Prior to opening for business, the premises must be equipped with safety equipment. Equipment requirements vary according to the size of the property and number of guests it can accommodate.

The capacity of the property is determined by the number and type of beds at the property. There may not be more convertible beds than regular beds. Removable beds/cots are not limited in quantity.

For facilities accommodating fewer than 50 people (check with the Town Hall for required quantities):

Fire extinguisher
Fire blankets
First aid kit
Manuals for appliances or information about how to use them
A notice clearly indicating the local emergency phone number (Tel: 112)
For facilities accommodating more than 50 persons (check with the Town Hall for required quantities):

Fire extinguishers
Fire blankets
First aid kits
Manuals for appliances or information about how to use them
A notice clearly indicating the local emergency phone number (Tel: 112)
Fire protection measures and a declaration of responsibility by the owner
The following may also be required: (check with the Town Hall)

Smoke alarms
Carbon monoxide detectors
Gas detectors
Within 60 days of application, the Town Hall should inspect the property in order to confirm that the legal requirements are met. If it is determined the property does not meet requirements, guests can no longer be accepted.

How to Register
The following documents are required in order to register as an Alojamento Local:

A completed registration form (available from the local Town Hall)
Proof of ownership of the premises to be registered
The deeds (caderneta predial) filed with the Land Registry (Caderneta)
A valid habitation permit (issued by the Câmara)
Safety declarations issued by qualified technicians that certify that electrical, gas and boiler installations meet legal operating requirements
A floorplan of the accommodation to be licenced (the floorplan may be for the building in its entirety or just the area to be licenced)
After the application has been submitted, a stamped copy is returned to the applicant. Once this process has been completed, the applicant may begin taking bookings for the property.

Advertising
Any advertising of the accommodation must include the letters "AL" or the words "Alojamento Local" after the name. A sign issued by the Câmara must be displayed near the main entrance to the premises.

Complaints
An official Complaints Book (Livro de Reclamações) must be kept on the premises at all times. If a complaint is lodged, the original complaint sheet must be sent to the Food Safety and Economic Authority (Autoridade de Segurança Alimentar e Económica/ASAE), which will investigate the claim.

Contribution by Cathy Taylor, GKE.LDA, Algarve Property Management and Rentals
Edificio Dunas Do Alvor, Loja 23, Alvor, Algarve 8500-084 (Portugal)
Tel: +351 282 458 413 / e-mail / Website
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[shanagarry]

Widge - we all get it - you have done everything by the book and you are on a crusade to ensure everybody else does likewise. I can see your point but I believe you are pushing on a very closed door. Those who haven't by now are unlikely to do so.

Do you honestly believe that those who have no intention of complying (and I believe it is probably the majority) with the legal requirements are going to take any notice of your relentless 'do as I do' rants?

I am sure you mean well - but it's getting too repetitive - give it a rest please