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Newsletter June 2019

Legal Updates

New generation of housing policies

Keeping in mind the “increasing of the penalties for the maintenance of unused properties in areas where they are most needed,” Decree-Law no. 67/2019 published on the 21st of May, which increases municipal property tax (IMI) for vacant buildings in urban pressure zones.

A zone of urban pressure is considered as a zone where there is a significant difficulty in accessing housing, either due to the shortage or inadequacy of the housing supply to the existing needs, or because this supply corresponds to values higher than those that are acceptable to most households.

Municipal tax rates on urban buildings, which can vary between 0,3% and 0,45%, are thus increased to six times, when the buildings have been vacant for more than two years and are located in areas of urban pressure. In addition, such fees shall be increased by a further 10% in each subsequent year, subject to the limits legally established. It is also expected that the revenues obtained by virtue of this measure will affect the financing of municipal housing policies.

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Tax exemptions in the forest for large investors

The State Budget for 2019, within the scope of the forest resources investment policy, exempts from IRC income of any nature obtained by real estate investment funds or real estate investment companies that are set up and operate in accordance with national legislation, provided that at least 75% of their assets are allocated to the exploitation of forest resources and provided that it is subject to forest management plans.

These entities are also exempt from Stamp Duty in the costly acquisitions of the right of ownership or equivalent rights, relating to rustic buildings intended for forestry purposes, provided that they are not transferred in the two subsequent years.

It should also be noted that income from units or shareholdings in entities to which the exemption from corporate income tax applies under the terms above, paid or made available to the respective holders, are normally subject to withholding income tax or IRC, at the reduced rate of 10%

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Business Updates

Record investment in commercial real estate assets

By the end of 2018, Portugal registered a 54% growth in the real estate sector, driven by the search for new assets by investors, resulting in a global and continuous investment in the order of 3.5 million euros. This is in line with the European panorama which, for the sixth consecutive year, has exceeded the historic mark of EUR 200 billion in investment in the sector.

Similar to the results achieved in the previous year, in the first 3 months of 2019, about 700 million euros were transacted in commercial real estate assets. The investments in the retail sector, with an accumulated value of 350 million euros, equivalent to 50% of the amount invested, and in the office market, which accounted for 39% of the total investment, amounting to 266 million euros – according to the assessment of the real estate consultant Cushman & Wakefield.

In spite of the progressive stagnation of a highly profitable sector, demand should continue to increase and investment in commercial real estate should leverage the leading position as the most profitable investment sector in Portugal and Europe.

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The return of the crypto coins

After a shot in the value of the crypto coins in 2017, and the subsequent fall of the next year, Bitcoin seems to be back.

The world’s largest crypto currency has already doubled in value since the beginning of 2019, while the market capitalization has grown from a low of $ 105 billion at the end of 2018 to the current $ 220 billion.

There are several reasons to justify this recent appreciation, but the main one is the commercial war between the US and China – which led to sharp falls in the stock markets – and it is even hoped that bitcoin will be one of the ways to get around the rates.

Crypto-assets are, as it seems, gaining new interest and relevance – again.

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