NEWSLETTERS

In case of sub-tenancy, also considered as “rent” is the balance between the amount received by the sub-tenant and the amount paid to the landlord.

Such income is taxable under the IRS, Category F – Rental income.

It is possible to offset to the income specific expenses regarding maintenance and conservation paid by the person who receives the rental income as long as those are duly documented. These expenses include the annual IMI (annual rates) paid in respect of the property. In case of an autonomous fraction (apartment) condominium costs are also deductible.

The tax rates depend on whether the person is resident or not in Portugal.

If the income is received by a resident, the tax rate will be on a sliding scale according to the global income received by the family as follows:

Total Income (in Euros)							Tax Rates (in percentages)
							Normal (A)				Average (B)
Up to 4,639							10,5				10,5000
From 4,639 to 7,017							13				11,3472
From 7,017 to 17,401							23,5				18,5994
From 17,401 to 40,020							34				27,3037
From 40,020 to 58,000							36,5				30,1545
From 58,000 to 62,546							40				30,8701
Above 62,546							42

In the case of a non-resident individual or company that receives rental income; they would be subject to a special rate of 15%, according to Article 72 (1) of the IRS Code:

ARTICLE 72º Specials rates 1 – The capital gains and any other income received by a non resident in Portugal that cannot be charged to a branch located in Portugal and is not subject to retention in the source by free rates, are taxed at a rate of 25% or 15% in case of rental income, except regarding the provisions in number 4. (...)"

The individual must deliver the income declaration Model 3 together with the annex F in the year following the income accruing.