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Portugal: Municipal housing companies to pay VAT on rents? |
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Municipal social housing companies in Portugal are facing a hard time as they might end up having to pay VAT on their revenues from rents. The tax board wants them (and in some cases already done) to pay 20% over the value of the rents they collect (also retroactively for the last 4 years).
The tax board interpretation is that they provide a service to the municipality for which they are paid through rents, and so they should pay TVA for this service on the amount of the rents collected.
Municipal housing companies in Portugal are 100% owned by the municipalities and they basically act on their behalf and following their orders. Furthermore, they charge income-based rents to social housing tenants. Rents are already very low (around 65€ per month), and they are already suffering further decrease due to increasing unemployment and the general impoverishment in this time of recession.
Having to pay VAT on rents might mean rents will have to be increased or the provision of social housing might not be sustainable anymore.
> For further information, please contact Joao Carvalhosa at
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