Portugal's Resort Association Warns Against Proposed Property Tax Hike for Foreigners
The Portuguese government's recent proposal to increase the property transfer tax for non-resident buyers has drawn sharp criticism from a key industry body, which warns the policy could backfire and damage regional economies. The announcement, which outlines an intention to raise the Imposto Municipal sobre Transmissões Onerosas de Imóveis (IMT) for foreign nationals, has prompted the Associação Portuguesa de Turismo Residencial e Resorts (APR) to call for significant exemptions.
In a formal communication, the association, representing over 100 tourist and residential developments, expressed deep concern over the plan. Pedro Fontainhas, the executive director of APR, stated that the policy is a "strategic mistake that will only lead to the loss of investment, employment, and tax revenues for these regions." The government's plan currently intends to exclude Portuguese emigrants from the tax increase but applies it to other foreign investors. The APR is advocating for tourist developments and designated low-density territories to be completely excluded from the measure's scope.
The association's primary argument is that the residential tourism market operates separately from the primary housing market used by Portuguese residents. "The tourist developments, located outside of urban centers, do not compete with the primary housing market of Portuguese residents," the APR's statement clarified. It posits that these properties, intended for temporary and holiday use, actually relieve pressure on the permanent housing stock in crowded urban areas. The policy, they argue, fails to distinguish between different types of property investment.
To support its position, the APR referenced an economic impact study conducted by Nova SBE University. According to the study's findings for 2024, the residential tourism sector was a massive economic driver between 2014 and 2023, generating €96.8 billion in Gross Value Added (GVA), supporting 2.85 million jobs, and contributing approximately €15 billion in taxes. The direct impact of non-resident property purchases alone was valued at €298 million in GVA and over 9,000 jobs over the decade.
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The APR stressed that investment in regions such as the Algarve, Alentejo, the western coast, Madeira, and the Azores has been a fundamental pillar of their economic structure for years. The association believes that failing to recognize the specific nature of this sector will concentrate pressure on urban centers and undermine regional development goals. The organization has urged the government to maintain a stable and predictable fiscal environment, which it deems an "essential condition for attracting and retaining foreign investment."
The government has not yet publicly responded to the concerns raised by the APR. The proposed tax hike is part of a broader set of measures aimed at addressing housing market pressures across the country. However, industry stakeholders argue that a one-size-fits-all approach could have unintended and detrimental consequences, particularly for regions heavily reliant on tourism and foreign investment for their economic vitality.
The APR's appeal calls for decisions to be based on "data and economic impact and not on generalized perceptions." The outcome of this debate will be closely watched by foreign investors and developers, as it could significantly alter the financial landscape for property acquisition in some of Portugal's most popular destinations.
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