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IMI
IMI
Sorry but it is correct. The proposals are that as from 2004 offshore owned properties will pay 5% rates.
Revision of the tax valuations of offshore owned homes may take some time as they may be at the back of the queue.
Word in the tax office is that the valuations will probably hit at about 90% of true market value
Revision of the tax valuations of offshore owned homes may take some time as they may be at the back of the queue.
Word in the tax office is that the valuations will probably hit at about 90% of true market value
IMI etc
New acquisition of property by the "traditional" offshore company is probably finished, yes.
Existing offshore held property still has many advantages and there are some possible ways to avoid the new taxes.
Just hold tight for now and this will be posted on the financial page of this website.
Existing offshore held property still has many advantages and there are some possible ways to avoid the new taxes.
Just hold tight for now and this will be posted on the financial page of this website.
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concerned
New IMI Offshore TAX
Presumably any properties brought onshore would not be subject to CGT??
This could dampen the prices somewhat !!!
Can't see anyway around it.
This could dampen the prices somewhat !!!
Can't see anyway around it.
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Offshore Owner
IMI
Thank you Biffa - sure would be interested to hear of ways around it as it certainly appears to be a gloomy outlook for offshore vehicles, especially if the tax office get their act together and re value the properties to establish a true value before next year . Highly unlikely I know, but the consequences are dire. Many people will I fear have to bite the bullet and suffer a one off SISA payment to avoid paying a recurring astronomic IMI bill each year. 5 % of the true value of a good size well positioned property that has benefitted many years of good growth = lots of euros in IMI, work it out!!!
The lawyers will be happy though, as bringing properties onshore will of course generate lots of revenue for them, but not so good for the specialist offshore adminstrators or perhaps the real estate agents as this could, as someone else has already pointed out, have a detrimental effect on house prices. The only positive aspect of bringing a property onshore is that it will establish a higher purchase cost -in the tax office's eyes for CGT purposes for future disposals. This assumes that no CGT arises when bringing it back offshore.
Hope that some whizzo is able to define an equally whizzo solution!!!!
The lawyers will be happy though, as bringing properties onshore will of course generate lots of revenue for them, but not so good for the specialist offshore adminstrators or perhaps the real estate agents as this could, as someone else has already pointed out, have a detrimental effect on house prices. The only positive aspect of bringing a property onshore is that it will establish a higher purchase cost -in the tax office's eyes for CGT purposes for future disposals. This assumes that no CGT arises when bringing it back offshore.
Hope that some whizzo is able to define an equally whizzo solution!!!!
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MIKE VERRAN
- CVO Newbie
- Posts: 5
- Joined: Tue Feb 04, 2003 7:02 pm
IMI
I have calculated my IMI to be nine thousand six hundred euros with the rebate (makes oxfordshire cheap) however i think the majority of us bought villas in offshore companies as a legal means of avoiding sisa and unfortunately the canny portugese fiscal department no doubt tutored by a uk tax export have got wise to this wheeze and one way or the other we are going to have to pay,i myself will be biting the bullit and bringing my house back into private ownership rather than wait 5years for the authorities to revalue caramuijera and face an even bigger bill.
IMI etc
Your comments are well considered. One problem facing many who might wish to sell, whether offshore or not, is Capital Gains Tax. The old bad habit of under declaration which has endured for years can leave one with a very low tax base for CGT calculation purposes. Additionally the Government allow an inflation figure to set against that base price which is calculated on the increase in price of bread and milk rather than houses! Thus a property bought in 1997 and sold this year would only get a 1,17 factor allowed which is ridiculous. In the past this problem has been resolved by a similar underdeclaration on sale but that will no longer be possible. There is a possible escape loophole here for tax residents but not for non residents be it an individual or company. The offshore company may still give protection against CGT if transfer is by way of a transfer of beneficial interest but of course as you say it is now at a cost due to the 5% IMI which may be prohibitive. There are some possible solutions, perhaps not one size that fits all, and I hope to outline them very shortly but would prefer to do that not in open forum at this stage. Perhaps those interested can contact me on biffa@carvoeiro.org
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MIKE VERRAN
- CVO Newbie
- Posts: 5
- Joined: Tue Feb 04, 2003 7:02 pm
IMI
Biffa - Thankyou for your comments i must admit i had not considered the CGT angle however i will be talking with advisors over the comeing weeks and hopefully a solution will be found,anyway as indicated in my previous message the noose is tightening and large annual bills will have to be paid or alternatively a large one off sisa/cgt shirt remover.
On the potentially brighter side i am sure there our company owners who employ armies of accountants,and as i write i am sure they will be pouring over the legislation looking for the "Lisbon loophole"
On the potentially brighter side i am sure there our company owners who employ armies of accountants,and as i write i am sure they will be pouring over the legislation looking for the "Lisbon loophole"
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Concerned
IMI
Biffa - Does this mean that an offshore company selling an asset into private ownership gives rise to CGT in Portugal .CGT to whom? The beneficiaries of the offhsore company -no as this is not recognised by Portugal tax system?
I would be interested to hear comments as this is a key factor and would almost certainly add to an already large SISA bill.
I would be interested to hear comments as this is a key factor and would almost certainly add to an already large SISA bill.
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concerned
IMI
So to be clear to those who perhaps have not appreciated the enormity of this issue
Example:
Offshore company acquires property at a declared value of Euro 135,000
Owner now has two options:
1) Continue to hold it in an offshore company.
He would then face an annual rates (IMI) bill of 5% on the current rateable ( tributavel) value. This is almost certainly considerably lower than both the true market value and also the declared value but say Euro 60,000. Therefore his rate bill will be Euro 3,000 per annum( 5% of 60000). Taxman wants to address the low rateable value and substitute a real value sometime in the future - when we don't know.
When he does the true value becomes say Euro 400,000 - Biffa seems to think this figure is calculated at around 90% of the market value. Enter new annual rates (IMI) bill of Euro 20,000. Not so good eh?
2) Sell from offshore to private ownership.
This would address his rates bill and bring it back down to reality of between .5 and .8 %p/a depending on pre defined criteria such as location, cost etc
But.. and it is a &%&£%£ big but, he would have to pay SISA of 8% less Euro 10,400 concession on the revalued amount . Therefore 400,000x 8%-10,400= a SISA bill of Euro 21,600.
Plus there is Captial Gains Tax (CGT) to consider. This is where I become a little fuzzy as I think a disposal from offshore into private ownership will not give rise to CGT. Biffa please feel free to correct me . However if it does, then it is calculated on the difference between the declared value - remember this as Euro 135,000 and the new revalued amount of 400,000
So, 400.000 less 135,000 x25% = another stonking great lottery win for the local tax man of Euro 66,250 - minus a bit of taper relief depending on the number of years you have owned it, but Biffa says this is practically worthless as it was based on some meaningless bread and a water inflation index.
Summary - your options are.....
1) Keep it offshore and you will have the pleasure of paying the Camara in this example Euro 20,000 every year.
2) Take it private and pay him now a combined SISA / CGT bill of Euro 87,850.
I predict that the number of nudist beaches in Carvoeiro will increase in the next year or so as none of us will any shirts on our backs!!!!
Example:
Offshore company acquires property at a declared value of Euro 135,000
Owner now has two options:
1) Continue to hold it in an offshore company.
He would then face an annual rates (IMI) bill of 5% on the current rateable ( tributavel) value. This is almost certainly considerably lower than both the true market value and also the declared value but say Euro 60,000. Therefore his rate bill will be Euro 3,000 per annum( 5% of 60000). Taxman wants to address the low rateable value and substitute a real value sometime in the future - when we don't know.
When he does the true value becomes say Euro 400,000 - Biffa seems to think this figure is calculated at around 90% of the market value. Enter new annual rates (IMI) bill of Euro 20,000. Not so good eh?
2) Sell from offshore to private ownership.
This would address his rates bill and bring it back down to reality of between .5 and .8 %p/a depending on pre defined criteria such as location, cost etc
But.. and it is a &%&£%£ big but, he would have to pay SISA of 8% less Euro 10,400 concession on the revalued amount . Therefore 400,000x 8%-10,400= a SISA bill of Euro 21,600.
Plus there is Captial Gains Tax (CGT) to consider. This is where I become a little fuzzy as I think a disposal from offshore into private ownership will not give rise to CGT. Biffa please feel free to correct me . However if it does, then it is calculated on the difference between the declared value - remember this as Euro 135,000 and the new revalued amount of 400,000
So, 400.000 less 135,000 x25% = another stonking great lottery win for the local tax man of Euro 66,250 - minus a bit of taper relief depending on the number of years you have owned it, but Biffa says this is practically worthless as it was based on some meaningless bread and a water inflation index.
Summary - your options are.....
1) Keep it offshore and you will have the pleasure of paying the Camara in this example Euro 20,000 every year.
2) Take it private and pay him now a combined SISA / CGT bill of Euro 87,850.
I predict that the number of nudist beaches in Carvoeiro will increase in the next year or so as none of us will any shirts on our backs!!!!
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Guest
yikes this all seems terrible...well the portuguese tax man killed the 4 wheel car market with his taxes now he is going to do the same with offshore firms...who by the way still own property here and have contributed by their purchases to the creation of wealth and jobs in construction....when i read these replies i wonder if the whole thing will have a bad effect on the whole property market...with only the british buying i wonder what will happen
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Guest
IS 5% IMI OFFICiAL TAX POLICY FOR 2004?
We would be interested to know where the official notification of this Tax is from.
We have been notified by our solicitor that the tax will be 1/15 of the Fiscal Value (rateable value) charged at a 25% tax.
Alternatively we could submit a tax return, as with all companies, and then pay the appropriate tax based on the excess income over expenditure.
Can't believe that the government would be so stupid to impose such an onerous tax in 2004 with all the obvious implications.
As anyone else been given similar information?
Tony
We would be interested to know where the official notification of this Tax is from.
We have been notified by our solicitor that the tax will be 1/15 of the Fiscal Value (rateable value) charged at a 25% tax.
Alternatively we could submit a tax return, as with all companies, and then pay the appropriate tax based on the excess income over expenditure.
Can't believe that the government would be so stupid to impose such an onerous tax in 2004 with all the obvious implications.
As anyone else been given similar information?
Tony
This is all very bad news and will I am sure have very serious ramifications for the whole tourist industry.
For those who don't own a property and believe that it does not effect them, think for a minute that on a property worth 250,000 euros the owner will receive a new tax bill of 12,500 Euros. If he needs to recover this (as most do) from say a letting income of 26 weeks he will have to increase his rental charge by 500 Euros per week - are holidaymakers prepared to pay this extra amount or will they flock to other locations like Spain, taking all their custom from the bars, restaurants, banks and almost any other business from the region with them?
For those who don't own a property and believe that it does not effect them, think for a minute that on a property worth 250,000 euros the owner will receive a new tax bill of 12,500 Euros. If he needs to recover this (as most do) from say a letting income of 26 weeks he will have to increase his rental charge by 500 Euros per week - are holidaymakers prepared to pay this extra amount or will they flock to other locations like Spain, taking all their custom from the bars, restaurants, banks and almost any other business from the region with them?