LAGOS NAVIGATORS R= 11; INFORMATION SHEET

Portuguese Boat Tax & Foreign-Registered Yachts

A Brief Backgroun= d to the Portuguese Boat Tax

For many years, Po= rtugal has had a national “Circulation Tax” – effectively a Road= Tax on all vehicles – but which applies to recreational yachts and motorb= oats, as well as to private aircraft! This tax is administered by local tax offices and this has led to differences in interpretation between locations.

A new law came= into effect from 1^st Jan 2008, and while the basic principles remained the same, changes were made to the liability, calculation and payment proce= dures. In 2010, we obtained written clarification of the definition of “Liability”. These notes include the latest information, as well as some points on the application and implications of = this tax.

Tax Rate

From 2008, “Boat Tax= ” became based on engine power only. I= t uses Kilowatts as the measure, and the rate for 2009 was €2.10 per Kw. As 1 HP =3D 0.7457 Kw, the tax is about € (Horsepower X 1.5).

Tax Exemption

Boats with an engine of le= ss than 20 Kw. (=3D 26.82 HP) or registered before 1986, are exempt from the tax. <= span style=3D'mso-spacerun:yes'> There is no requirement to register= or to claim this exemption.

Tax Liability = for Foreign-Registered Boats

The law only states that a foreign-registered boat becomes lia= ble for the tax after “a period greater than 183 days” in any part = of Portugal. After correspondence with the Centr= al Finanças Office, DGCI, in Lisbon, we have obtained this clarificatio= n - which should now be applied by all local offices.

“The tax is applied to all foreign-registe= red yachts kept anywhere in Portugal, either ashore or afloat, for a continuous period of more than 183 days in any tax year. There is = then a 30-day period, within which the tax must be paid.”<= /i>

Implications

This clarification means t= hat if a “visiting” foreign-registered boat is in Portugal on 1^{st
Jan, it would become liable for the tax on 4^th July, and the tax=
must
then be paid by 3^rd August.&nbs=
p;}Conversely, if you first arrive in Portugal after 2^nd July, you cannot achie= ve the 183 days needed to create liability in that tax year. In Portugal, the calendar year is = the Tax Year, and each tax year is treated as a separate unit. Therefore, the standard 9-month wi= nter contract avoids tax liability in both years.

Note that the local nature of the tax means that t= here is – at the moment – no exchange of information between different tax offices and no way to check on time spent in other marinas or= in anchorages. But beware - the Portuguese tax systems are becoming more sophisticated!

Tax Avoidance is not Tax Evasion

A (probably unintentional!) consequence of this clarification = is that for a boat kept in Portugal over a whole tax year, a documented absence from Portugal - from say 1^st to 5^th July each year - = will avoid liability for this tax. An alternative would be to take two short breaks out of Portugal in the spring= and autumn – so long as they were less than 183 days apart.

Such Tax Avoidance tactics will probably only make sense if your engine size makes the B= oat Tax punitive. You would also need= to be reasonably close to a border and have a marina near-by, to provide document= ary proof of your absence from Portugal. Hiding in an anchorage won’t do!

Future Legislation

In theory, such Tax Avoidance visits could be repeated ad infi= nitum. This seems too good to be true = 211; and indeed it is. Under UK and Portuguese law, any boat kept here “permanently” should be registered here, and would then fall under normal Portuguese rules. Being realistic, the least we can = expect is that if this loophole is exploited to any significant extent, the existi= ng law on registration will be enforced more stringently.

Payment Procedure= s

To calculate any tax liability, the “Treasury” sec= tion of Finanças must see the yacht’s Registration Document and pro= of of engine power, e.g. a Bill of Sale or Maker's Booklet. I= f and when you need to pay the tax, it must be paid in cash or by a c= heque drawn on a Portuguese bank. If the owner is out of the country on the due date, someone else may make the payment on his behalf.

Normally, to pay any tax in Portugal the individual needs a "Número de Contribuinte", which is just a Fiscal Identification Number. It has nothing to do with Income Tax! If you already have one, you can continue to pay the tax as in the past.

Fiscal Representatives

If you do NOT yet have a Fiscal Number, you will NOT now be able to get one unless you have a fixed address in Portugal – and “Yacht Rosy; = Berth J 05; Marina de Lagos” is not an acceptable address. In this case you must appoin= t a “Fiscal Representative” - usually an accountant or lawyer ̵= 1; who acts officially on your behalf and effectively underwrites your legal commitments.

You could get a friend, who already has a Numero Contribuente, to pay this tax for you.&nbs= p; He then becomes, in effect, your “Fiscal Representative”= - and this role has significant legal responsibilities. (Eg. If you left Portugal after the 30 days “grace” period, this representative = could be liable for your boat tax.) Neither we, nor the Marina Management, will undertake this duty on behalf of any ot= her yachtsman, as it has open-ended commitments that extend into the future.

This is= our understanding of the position as at 12^th February 2010, based on= letters to and from the Central Finanças Office (DGCI) in Lisbon and discuss= ions between the Manager of Marina de Lagos and the Lagos Chief Financial Office= r.

If you = have a query about this note, contact us via our web site, www.lagosnavigators.net

Queries= on your own tax situation should be addressed to th= e local Finanças Office.

For tho= se interested, copies of the text of the relevant law, and of the letter from = Central Finanças Office, DGCI are available – but they are, obviously, written in Portuguese. <= /o:p>