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IMI – Municipal Tax – Updating the average construction value and its Effect on this tax calculation

11 January, 2022

One of the main characteristics of the property tax reform implemented in 2003 was the introduction of an objective formula for calculating the tax value of a certain asset (VPT).

Indeed, the aforementioned reform presents as its main characteristic a new system for evaluating the property tax value.

For this purpose, and contrary to what happened with the Municipal Contribution, the Legislator analysed which objective elements influence the determination of the tax value of each property. Thus, the VPT is no longer dependent on a case-by-case and often arbitrary assessment by the evaluation entity, becoming the result of an objective formula.

The IMI Code, in articles 38 to 46, reflects this same analysis. In these articles, each of the relevant elements is identified concretely and objectively, being assigned a numerical expression, a coefficient.

Indeed, the legislator also understood that each of the objective elements does not impact the calculation of the VPT in an identical way. In this sense, coefficients were included that show the capacity of each of the elements to influence the calculation of the tax value of each building.

As is clear from the Law, namely from articles 38 to 46 of the IMI Code, the legislator also understood that there are circumstances that increase the value of real estate and others that reduce that same value. Thus, the identified elements can be “majorated” or “diminutive.”

The base element, which is applied indistinctly to the entire national territory, is the average construction value per square meter. This average construction value is determined taking into account, namely, the direct and indirect costs incurred in the construction of the building, such as those relating to materials, labour, equipment, administration, energy, communications and other consumables.

As a basic criterion for determining the value of buildings, this index has a direct and transversal impact on the assessment (for tax purposes) of the entire set of buildings located in the national territory.

Over time, the average construction value varied as follows:

  1. a) 2003 – Ordinance no. 982/2004, of August 4th – €480.00;
  2. b) 2004 – Ordinance No. 982/2004, of August 4th – €480.00;
  3. c) 2005 – Ordinance No. 99/2005, of January 17th – €490.00
  4. d) 2006 – Ordinance no. 90/2006, of January 27th – €492.00
  5. e) 2007 – Ordinance No. 1433-C/2006, of December 29th – €492.00
  6. f) 2008 – Ordinance No. 16-A/2008, of January 9th – €492.00;
  7. g) 2009 – Ordinance No. 1545/2008, of December 31st – €492.00;
  8. h) 2010 – Ordinance No. 1456/2009, of December 30th – €482.40
  9. i) 2011 – Ordinance No. 1330/2010, of December 31st – €482.40;
  10. j) 2012 – Ordinance No. 307/2011, of December 21st – €482.40;
  11. k) 2013 – Ordinance No. 424/2012, December 28th – €482.40;
  12. l) 2014 – Ordinance No. 370/2013, of December 27th – €482.40;
  13. m) 2015 – Ordinance No. 280/2014, of December 29th – €482.40;
  14. n) 2016 – Ordinance No. 419/2015, of December 31st – €482.40;
  15. o) 2017 – Ordinance No. 345-B/2016, of December 30th – €482.40;
  16. p) 2018 – Ordinance No. 397/2017, of December 19th – €482.40;
  17. q) 2019 – Ordinance No. 330-A/2018, of December 20th – €492.00;
  18. r) 2020 – Ordinance No. 3/2020, of January 13th – €492.00;
  19. s) 2021 – Ordinance No. 289/2020, of December 17th – €492.00
  20. t) 2022 – Ordinance No. 310/2021, of December 20th – €512.00

 

From the analysis of the evolution of the average construction value, it can be seen that, between 2021 and 2022, there is an increase of around 4%. This is the biggest increase in the history of this tax. In fact, the previous biggest increases did not exceed 2% so the Government applied the biggest increase in the average construction value in memory.

Thus, given the increase, the base value of all buildings located in Portugal, calculated from the average construction value, will be €640.00, in contrast to the current €615.00.

For all that is indicated, and without prejudice to the effect that other criteria may have, namely if the coefficients applied to the location do not change, properties will tend to have a 4% increase in their VPT, with reference to the year 2022.

Thus, it is advisable to exercise greater prudence in decisions to request the revaluation of properties, since the change in the average construction value results in a potential significant increase in the VPT, which is the basis for calculating the Municipal Property Tax.

Martinez-Echevarria & Ferreira has professionals with the technical capacity to help you find the solution that best suits your personal, professional or business situation so that you can properly structure, economically, regulatory and fiscally, your activity.

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