Portuguese Boat Tax - Circulation Tax

 Background 

For many years, Portugal has had a national “Circulation Tax” – effectively a Road Tax on all vehicles – but which applies to recreational yachts and motorboats, 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 1st Jan 2008, and while the basic principles remained the same, changes were made to the liability, calculation and payment procedures.

Tax Rate

From 2017, following extensive dialogue with the relevant authorities it can be confirmed that at this point in time the Circulation Tax is only applied to boats and yachts built after 1986 and with an engine generating over 20 Kw (26.82 HP).  The tax rate is based only on engine size – in 2017 it is €2,65 per Kw (1 Kw = 0.7457 HP).

 

Tax Liability for Foreign-Registered Boats

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

“The tax is applied to all foreign-registered 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.”

Implications

This clarification means that if a “visiting” foreign-registered boat is in Portugal on 1st Jan, it would become liable for the tax on 4th July, and the tax must then be paid by 3rd August.   Conversely, if you first arrive in Portugal after 2nd July, you cannot achieve 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 winter contract avoids tax liability in both years. 

Note that the local nature of the tax means that there 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!

The 183-day rule applies to a continuous period in any one tax year – January to December.  This means that a documented absence of over 3 days in early July will break continuity. Of interest to Marina berth holders, and those thinking of over-wintering in Lagos, the standard Marina 9-month winter contract (mid-September to mid-June), avoids the requirement to pay the tax in both years

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 1st to 5th 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 Boat Tax punitive.  You would also need to be reasonably close to a border and have a marina near-by, to provide documentary 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 infinitum.  This seems too good to be true – 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 existing law on registration will be enforced more stringently.

Payment Procedures

To calculate any tax liability, the “Treasury” section of Finanças must see the yacht’s Registration Document, some proof of engine power, e.g. a Bill of Sale or Maker's Booklet, and all the usual dimensions.   If and when you need to pay the tax, it must be paid in cash or by a cheque 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.

Fiscal Number - Número Fiscal de Contribuinte

Normally, to pay any tax in Portugal the individual needs a “Fiscal Number - Número Fiscal de Contribuinte ", which is just a Fiscal Identification Number.  It has nothing to do with Income Tax!

In May 2012, it was established (Thanks to Séamus O'Connor of Yacht “Slí Eile”) that it is now possible to get a fiscal number as a foreign national using your own home address and without the services of a Portuguese fiscal representative.   Simply go to the “Servico de Financas” office, taking your passport and some other means of identifying you and your home address, for example a driver's licence, ICC etc. The cost is a one- off payment of € 10.20.

This is our understanding of the position as at 09th May 2012, based on letters to and from the Central Finanças Office (DGCI) in Lisbon and discussions between the Manager of Marina de Lagos and the Lagos Chief Financial Officer.

If you have a query about this note, or can offer updated advice, please contact us.

Queries on your own tax situation should be addressed to the local Finanças Office.

For those 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.

 

If you have any updates on this subject, please click here to email the Lagos Navigators web team
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