Find out what this tax is and what it is for.
The Additional Municipal Property Tax (AIMI) applies to anyone who owns high-value real estate. Learn about the rules and exceptions.
The Additional Municipal Property Tax (AIMI) is a relatively recent tax. It was introduced in 2017 to replace the Stamp Duty, which taxed properties worth over one million euros individually.
The AIMI is levied on the real estate assets of individuals and companies. It covers residential buildings, land for construction, and undivided inheritances, i.e., those that have not yet been shared among the heirs.
However, there are exceptions and ways to reduce the tax payable.
What is AIMI?
AIMI is, as its name suggests, an additional tax to IMI (Municipal Property Tax), paid by owners with substantial real estate assets.
It is levied on the sum of the Taxable Asset Value (VPT) of all urban residential buildings or land with building permits that a person owns on January 1 of the year to which this tax relates.
Who is subject to payment of the IMI surcharge?
This tax applies to individuals and legal entities who, on January 1 of each year, are identified in the property register as owners of urban residential buildings or land for construction.
This means that if you buy a property after that date, it will not count towards the tax payable in September of that year.
For AIMI purposes, the designation of legal entity also covers so-called centers of collective interests without legal personality. This is the case, for example, with condominiums or trusts. Undivided inheritances are also included in this designation.
How is the taxable value determined?
To calculate the taxable value, i.e., the amount on which the tax is levied, it is necessary to add up the VPT of all residential buildings or land for construction owned by the taxpayer.
From this value, €600,000 is then deducted in the case of a natural person or an undivided inheritance. In the case of couples who opt for joint taxation, this amount doubles. For companies, there is no deduction.
In practice, this means that only if you have real estate assets above these values (€600,000 for individuals and undivided estates or €1.2 million if you opt for joint taxation) will you have to pay the tax. There are other situations that can lead to exemption from AIMI, as we will see below.
How is the tax payable calculated?
To calculate the tax, the AIMI rates corresponding to the taxable value must be applied, after the appropriate deductions have been made.
For AIMI purposes, the designation of legal entity also covers so-called centers of collective interests without legal personality. This is the case, for example, with condominiums or trusts. Undivided inheritances are also included in this designation.
How is the taxable value determined?
To calculate the taxable value, i.e., the amount on which the tax is levied, it is necessary to add up the VPT of all residential buildings or land for construction owned by the taxpayer.
From this value, €600,000 is then deducted in the case of a natural person or an undivided inheritance. In the case of couples who opt for joint taxation, this amount doubles. For companies, there is no deduction.
In practice, this means that only if you have real estate assets above these values (€600,000 for individuals and undivided estates or €1.2 million if you opt for joint taxation) will you have to pay the tax. There are other situations that can lead to exemption from AIMI, as we will see below.
How is the tax payable calculated?
To calculate the tax, the AIMI rates corresponding to the taxable value must be applied, after the appropriate deductions have been made.
AIMI rates differ for individuals and companies. Among individuals, the limits on taxable value can double if they opt for joint taxation. This option has advantages that we will explain later in this article.
For now, please note the rates in force:
Individuals:
- Over 600,000 and up to 1 million euros: 0.7%
- Over 1 million and up to 2 million: 1%
- Over 2 million euros: 1.5%
Undivided inheritances: 0.7%
Individuals who opt for joint taxation:
- Between 1.2 million euros and 2 million euros: 0.7%
- Over 2 million and up to 4 million euros: 1%
- Over four million euros: 1.5%
Legal entities: 0.4%
If the properties are for the personal use of the owners of the capital, administrative, management, or supervisory bodies, the rates for individuals apply.
Properties owned by entities based in tax havens: 7.5%
What you should know about joint taxation in AIMI
As we have seen, if you are married or live in a civil partnership and opt for joint taxation, the deduction amount (€600,000) is doubled. In other words, you only pay AIMI if, together, the couple has real estate assets worth more than €1.2 million.
Imagine, for example, that you own several properties with a total VPT of one million euros. If you are taxed separately, you will be charged a rate of 0.7% on 400,000 euros (the difference between 600,000 and one million). All things considered, you will pay 2,800 euros in AIMI. If you opt for joint taxation, and given that up to 1.2 million euros is exempt, you will not pay tax.
Even if only one member of the couple owns the properties, joint taxation can be exercised. To do so, it is necessary to submit the Declaration of Option for Married or Common-Law Taxpayers.
If both own properties, the VPT of each property is added together and a single AIMI assessment is issued.
Opting for joint taxation this year does not mean that you have to repeat that choice next year.
Undivided inheritance and AIMI
In the case of buildings that are part of an undivided inheritance, although treated as a legal entity, the AIMI rate applicable to individuals (0.7%) and a deduction of €600,000 from the taxable value apply.
Please note, however, that in order to benefit from this deduction, the head of the household (i.e., the person who administers the inheritance until it is distributed) must submit the Undivided Inheritance Declaration during the month of March. This document identifies the heirs and their respective shares. From April 1 to 30, each heir (including the head of the household) must confirm this declaration.
Source: Doutor Finanças