Municipal Revenue from Property Taxes Skyrockets by 91% in a Decade
A comprehensive analysis of municipal finances has revealed the dramatic impact of Portugal's real estate boom on local government revenues. According to official data from the Direção-Geral das Autarquias Locais (DGAL), the combined income from the two main property taxes—Imposto Municipal sobre Imóveis (IMI) and Imposto Municipal sobre as Transmissões Onerosas de Imóveis (IMT)—has surged by 91% over the last decade. This increase represents a €1.5 billion rise in annual collections, growing from €1.7 billion in 2013 to €3.2 billion in 2023.
The methodology for this analysis involved comparing municipal revenue reports from 2013 and 2023, focusing on the contribution of IMI and IMT to the total income of all Portuguese municipalities. The data shows that the weight of these real estate taxes in the overall fiscal structure of local governments has increased substantially. A decade ago, IMI and IMT accounted for an average of 10.5% of total municipal revenue. By 2023, that figure had climbed to 27.4%, demonstrating a growing reliance on the property sector to fund local public services.
The numerical findings indicate a strong correlation between real estate market activity and municipal financial health. In 2023, seven municipalities were identified where IMI and IMT collections constituted more than half of their total revenue. The geographic breakdown of these highly dependent municipalities shows a concentration in the Algarve region and other areas with high tourism and foreign investment. The municipality of Portimão leads the country, with 66% of its total revenue originating from these two property taxes. It is followed by Loulé, where the figure is 62%, and Grândola, at 61%.
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The time period comparison for Grândola, located on the Alentejo coast, shows a particularly sharp increase, with its revenue from IMI and IMT nearly doubling over the ten-year period, reflecting intense recent development in the area. This trend is consistent across many of Portugal's most dynamic property markets. As a result, these municipalities have become less dependent on financial transfers from the central government. The Lisbon municipality, for instance, was the least dependent in the country in 2023. According to calculations based on the DGAL data, 84% of the capital's income was classified as 'own revenue,' with property taxes being a major component.
Industry experts comment that this fiscal dependency creates a strong incentive for municipalities to support further real estate development and maintain high property values. The analysis of market segments shows that both luxury properties, which generate high IMT upon sale, and the general housing stock, which contributes annually through IMI, are critical to this revenue stream. The municipalities of Albufeira and Lagoa, both in the Algarve, rank second and third for financial autonomy, with own-source revenues of 84% and 81%, respectively. For both, approximately half of their total income is derived directly from IMI and IMT. No government response to this growing dependency has been noted, but the data provides important historical context for understanding the financial stakes of local councils in the real estate market. Stay informed on Lisbon property market developments at realestate-lisbon.com.