This year, the Tax and Customs Authority (AT) identified thousands of property owners with signs of tax omissions, in a context in which the control of real estate income is being called into question due to failures in existing inspection mechanisms. At issue are rental and local accommodation income that may not be properly declared, thus resulting in tax avoidance.
In this context, the AT identified, throughout this year, around 8,500 taxpayers with discrepancies or facts that indicate omissions in the declaration of income associated with properties. The information was provided by a source from the Ministry of Finance.
According to the same source, AT currently has several actions underway aimed at reinforcing control over compliance with tax obligations related to real estate income, with a special focus on rental and local accommodation.
Data crossing at the center of tax control
These actions are mainly based on the crossing of information declared, or omitted, by property owners with other data already in the AT’s possession.
These elements include declarations submitted by tenants and communications made by entities supplying water, energy and telecommunications.
This data crossing is based, among other instruments, on the information contained in the Model 2 declaration of the Municipal Property Tax, which allows the AT to determine whether a property is being used for rental and whether the respective income is being communicated to the Tax Authorities.
Union warns of system failures
The information from the Ministry of Finance follows criticism made by the president of the Tax Workers Union, Gonçalo Rodrigues, who warns of serious failures in the control of income from real estate.
According to the union leader, the control of undeclared leases is compromised, largely due to problems in filling out the IMI Model 2 declaration, which often reaches the AT without all the necessary information.
IMI Model 2 loses effectiveness
The union emphasizes that the Model 2 declaration is one of the main instruments available to the AT to verify whether a given property is rented and whether the respective income is declared. However, the incomplete delivery of this information ends up making effective monitoring difficult, or even unfeasible.
Gonçalo Rodrigues considers that this failure seriously compromises AT’s ability to control property income that escapes taxation.
Millions of euros at risk for the State
According to the union president, the lack of effective supervision could result in the loss of millions of euros in tax revenue for the State, since there is rental income that remains outside the Tax Authorities’ radar.
At issue is the mechanism provided for in article 125 of the Municipal Property Tax Code, which obliges companies distributing water, energy and fixed telecommunications to regularly communicate to AT the contracts signed with end customers, as well as any changes.
Information crossing is not working
Despite the existence of this legal mechanism, the union denounces that, in practice, the crossing of this data is not being done effectively. According to Gonçalo Rodrigues, cited by , the information collected is not being properly monitored or used to detect situations of undeclared rental.
The union leader states that this is yet another example of AT’s operational failures, warning of the need to improve control systems to ensure compliance with tax obligations in the real estate sector, thus reducing tax avoidance by landlords.
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