In recent years, short-term rentals in Portugal have come under real pressure, particularly in major cities where restrictions and political debate have put the sector under the spotlight.
For many owners of tourist rental property, the legal uncertainty has been just as challenging as the rules themselves. There is now a shift in direction, following changes to the legal framework introduced by the Luís Montenegro government, which affect tourist properties operating under the Alojamento Local (AL), or Local Accommodation regime.
What does the repeal of the 'Extraordinary Contribution' on short-term rentals mean?
The repeal of the Contribuição Extraordinária sobre o Alojamento Local (CEAL), Extraordinary Contribution on Local Accommodation, enacted by the President of the Republic, Marcelo Rebelo de Sousa, brings an end to the 15% levy that applied to properties used for holiday lets, particularly residential units along Portugal’s coast.
This charge had formed part of the previous PS government’s Mais Habitação package, but it was scrapped with retroactive effect to 31 December 2023. In practical terms, owners of vacation properties no longer have to pay this contribution.
The removal of the so-called “age coefficient” also means that these establishments are no longer subject to this factor when calculating Municipal Property Tax (IMI).
Despite these changes, condominium associations can still object to the use of a property for short-term rentals. However, the final decision rests with the mayor, who may encourage mediation between the parties rather than cancelling the registration outright.
What is mandatory for holiday rentals?
If you’re planning to start operating under the Local Accommodation (AL) regime, it’s important to understand the legal standards that apply to the sector.
These rules are designed to ensure that properties offer appropriate levels of comfort, safety and hygiene for guests, while also complying with tax obligations. The main requirements are as follows:
- Condition and equipment: 'local accommodation' properties must be in good repair, with all installations and equipment in proper working order. They must be connected to the public water and sewage network, or have suitable private systems in place, and provide both hot and cold running water.
- Accommodation units: rooms must have natural ventilation, appropriate furniture and essential equipment, a system to block out external light, and secure doors. There are also minimum size requirements: 6.5 m² for single rooms, 9 m² for double rooms and 12 m² for triple rooms.
- Sanitary facilities: bathrooms may be private or shared, but they must ensure privacy. There must be at least one bathroom for every four rooms or every 10 guests. Shared facilities must provide appropriate gender separation.
- Hygiene and cleanliness: properties must maintain high standards of cleanliness and upkeep. Towels and bed linen should be changed at least once a week, or in line with the agreement made with the guest.
- Breakfast: establishments that provide breakfast must comply with food hygiene and safety regulations. The service is compulsory for properties operating under the Bed & Breakfast designation.
In terms of first aid, the Directorate-General of Health requires a first aid kit containing items such as sterile compresses, plasters, adhesive tape, bandages, antiseptic solution, 70% alcohol, saline solution, scissors, tweezers and disposable gloves.
As for fire safety, establishments with a capacity for up to 10 guests must provide a fire extinguisher, a fire blanket, a first aid kit and a clearly visible display of the emergency number (112).
How much tax do you pay on a vacation rental in Portugal?
Anyone planning to operate a Local Accommodation (AL) property in Portugal must register their activity with the Portuguese tax authorities and take several taxes into account, most notably IRS (personal income tax).
Income from these properties can be taxed under either Category B (business and professional income) or Category F (property income). In addition to IRS, owners may also be liable for VAT (IVA) and IMI (Municipal Property Tax), among other charges.
IRS (Category B): You can choose between the simplified regime or organised accounting, depending on your annual turnover.
Under the simplified regime, only 35% of gross income is taxable in the case of houses and apartments. With organised accounting, you are taxed on net profit, meaning all eligible expenses can be deducted.
- Category F: This is an alternative for those who prefer to declare the income as rental income. In this case, you can opt for aggregation with other income or pay a flat rate of 28%.
Holiday rentals are also subject to VAT (IVA). However, an exemption may apply if annual turnover does not exceed €10,000.
Is it true that municipalities now have greater powers?
As of the start of 2025, municipal councils (câmaras municipais) have been granted broader powers to create regulations and planning tools tailored to the specific needs of their local areas. This allows them to set capacity limits and operational conditions for short-term rentals, without necessarily banning or penalising the activity itself.
The legislation also introduced new mechanisms to manage conflicts within condominium buildings. Residents can now file complaints with the local council in cases of serious and repeated disturbances. In addition, the role of the AL ombudsman and mediator has been reinstated, with responsibility for helping resolve disputes and encouraging dialogue between property owners and residents.
A practical example is the decision by the Lisboa Municipal Assembly to approve the immediate suspension of new short-term rental licenses in the city for six months, with the possibility of renewal. These developments reflect the increased authority of local councils to manage AL more closely and respond to local housing pressures. Operators and prospective investors should expect tighter oversight and stronger municipal involvement in setting limits and conditions.
How can you check if a holiday rental is legal?
To find out if a short-term rental is legally registered in Portugal, you should consult the National Register of Local Accommodation (RNAL) (Registo Nacional de Alojamento Local – RNAL).
If you have not yet registered your property, you will need to complete the short-term rental registration process by following these steps:
- Submit prior notification online through the Balcão Único Eletrónico (One-Stop Online Desk), together with your declaration of commencement of activity filed with the Portuguese Tax Authority. This can be done online or in person at a local tax office. Registration is mandatory, particularly if the property is advertised on platforms such as Airbnb or Booking, where the official registration number must be displayed.
- To register a holiday let unit in a residential building, unanimous consent from all condominium owners is required.
- You will need to provide the following documents: identification of the owner (or permanent certificate access code in the case of companies); a declaration of responsibility confirming the property meets legal requirements; a copy of the urban property tax certificate (caderneta predial urbana); a rental agreement, if applicable, authorising local accommodation use; proof of commencement or amendment of activity with the Tax Authority; minutes of condominium approval (required for hostels); and confirmation of the establishment’s category.
- After submission, the municipal council has 10 days (or 20 days in the case of hostels) to oppose the registration. If no opposition is raised within that period, the registration number serves as the valid title allowing the property to operate and be advertised.
- For houses and apartments, capacity is limited to a maximum of nine bedrooms and 30 guests.
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