Three years ago, the previous centre-right coalition government unveiled new property tax laws that resulted in numerous home owners and prospective investors in Portugal taking their money elsewhere. But according to the 2007 state budget tabled for voting this week by the Socialist government, owners of real estate registered through an offshore company can look forward to considerable property-related savings as from next January.
According to the state budget proposal, the annual council tax rate (IMI) on properties owned by companies in listed low-tax jurisdictions will be reduced from five percent to one percent from 2007.
In effect, should the assessed taxable value of an offshore registered property be one million euros, its owner can now look forward to a cut in IMI from a current figure of €50,000 to €10,000 – a saving of more than €3,000 a month.
But this alteration still leaves owners of properties registered in offshore companies paying double the IMI of all other homeowners.
In comments to The Portugal News, John Duggan of PricewaterhouseCoopers (PwC) explained that this turn around by the government is more a result of the government realising the damage the 2003 offshore legislation has done rather than any particular efforts from lobbyists.
“Bad publicity and the realisation that receipts had not increased as much as they had intended made them realise the law no longer posed any major advantages”, explained Mr Duggan.
PwC believes however that “the damage has been done” by this offshore legislation, which in 2003, prov