idealista investigated this question by speaking with Marta Morais Silva, the Principal Associate of idealista and António Medeiros Araújo, jurist at PRA – Raposo, Sá Miranda & Associados.

They began by explaining the importance of knowing how to distinguish the concepts of tax domicile and tax residence, which they say “although they are perceived as equivalent, they are often not considered for the same purposes, in terms of tax”.

The experts detailed how the law is applied in different cases. "Tax domicile is essentially used for procedural purposes and issues – such as being notified of tax collection, correcting or submitting a certain declaration, among others. A tax residence is the key element in determining whether a taxpayer has a strong enough connection to be taxed in Portugal. Such a connection, in some cases, will be having one’s own permanent home, a property which the taxpayer stays overnight, dines, receives friends and family, and spends free time, for example, whether it is their own property or leased."

According to Idealista, tax domicile is measured in accordance with Article 19 of the General Tax Law, based on the place of habitual residence, which will in most cases coincide with the taxpayer’s own permanent residence.

The question that stems from the surge of residential alternatives is whether tax domicile, for due tax purposes, can be applied for motor homes and prefabricated houses.

The concept of habitual residence, necessary to assess tax domicile, presupposes a degree of geographic permanence, so a caravan which is constantly on the move is not considered for tax domicile as it becomes unfeasible to determine its specific location. The same is applied to motorhomes used for transitory purposes, such as staying at a camping site only during the months of summer, when the taxpayer benefits from it.

On the other hand, motorhomes that remain permanently in a specific location may now be considered as tax residence, as long as it is based or fixed in the same place for more than one year. So if the caravan is fixed and geographically locatable, even with transfers to another part of a campsite or land, for example, it will always be considered a permanent residence.

Despite not being materially fixed to the ground, prefabricated or modular houses can also be considered to be permanent residences. In spite of this type of housing being acquired in a built state, they will be considered buildings for tax purposes, specifically in terms of IMI, so there is no doubt they will constitute a tax residence if the taxpayer so wishes.

In order for the constitution of tax residence in prefabricated or modular houses to occur, the homes must be previously duly licensed by the City Council, in terms similar to the licensing process which is required for the construction of conventional houses that are not mobile or prefabricated.

The determining element to subject prefabricated houses in the Regime Jurídico da Urbanização e Edificação, article two, relating to the concept of “buildings”, is the intended purpose for the “home”. If it is destined for housing and permanent use, such as the installation of a restaurant, bar or store open to the public, the prefabricated module is required to undergo a competent licensing process.

Without a license, the work eventually carried out will be considered illegal and may be embargoed by the City Council. In this case, the legal consequence will be the obligation to demolish the property or the obligation to cease its use. If this is not complied with, the offender will incur a crime of disobedience, which is punishable by a prison sentence of up to one year or by a fine of up to 120 days.