Seasonal rentals in Portugal: what are the regulations?

In October 2023, the law regarding seasonal rentals in Portugal changed. The amendments were based on the AL (Alojamento Local) licence, which a property owner needs to rent out their home in Portugal. Before this, a licence was not required.
This law was updated to reduce the impact of tourism on the Portuguese economy and its sustainability. The law is actually good news for property owners as it makes the requirements clear and structures the seasonal rental process in Portugal.

The AL licence is a number unique to your property that must be displayed on all advertising material and documents related to the rental. It is usually issued for 5 years and can then be renewed for another 5 years.

Obtaining the AL licence allows you to rent out your property to tourists short-term, both privately and on holiday booking platforms. You cannot advertise the property until you are granted the licence.
The property must be fully furnished and be located in or near an area attractive to visitors i.e. be near attractions such as beaches, historical monuments or the countryside.

First, you need to register the property as a small business on the Portuguese tax office website.
You need to register under one of two business activity categories:

• 55201 – furnished accommodation for tourists
• 55204 – other short stay accommodation

Next, you have to register as an AL. If you are resident in Portugal and have a digital certificate you can register on the official government website.

Otherwise, you will have to visit your local town council (Câmara Municipal).

The documents you will need to present include:

• ID (passport/resident’s card)
• Tax ID document (caderneta predial)
• Start of Activity document from the tax office
• Property deeds
• Housing licence (licença de habitação)
• A signed document that the property is fit for seasonal rentals

Seasonal rentals in Portugal are considered a business operation, not rental income.

If you expect to earn less than €200,000 per year from seasonal rentals you should choose the Simplified Regime (regime simplificado) in your tax declaration. You will be taxed on 35% of your income and the outstanding 65% is classed as running costs and is exempt from tax.
If your property earns more than €200,000 per year you will be charged a fixed rate of 21% corporation tax.

You will also have to pay VAT on your costs, currently charged at 6%. However, if you earn less than €10,000 from the property in a year you do not pay VAT.

It is advisable to use a tax expert to determine and declare your taxes in Portugal as the procedure can be complicated.

To use a property for seasonal rentals in Portugal it must meet set standards. The regulations state that the property must:

• Not have more than 9 bedrooms or host more than 30 guests
• Be fully furnished with kitchen utensils
• Have 1 toilet for every 10 guests (or 4 rooms)
• Meet the necessary health and safety requirements
• Meet the fire regulations
• Be connected to the local water supply and sewage system
• Have a minimum of 1 window or balcony
• Instructions on how appliances work or whether the guests are expected to feed animals or water plants should be displayed and given at the time of booking.
• Regulations regarding barbecues are particularly important due to the risk of wildfires.

You should also clearly display details of how to get in touch with the property manager in the event of a problem.

Seasonal rentals require the property to be kept in good condition at all times. This includes regular maintenance of the property, garden and swimming pool if there is one.

If you don´t want the burden of doing changeovers yourself, which can be exhausting in high temperatures, we advise you to use a property management company. You should also do this if you live in Portugal part-time.

Remember that you must have the AL before you can advertise your property.

When you market your property for seasonal rentals, consider who you want to target. Do you have a home on the coast that families will enjoy or is the property more suitable to couples wanting a quiet getaway? Is the property a city apartment that may suit remote workers in Portugal or is it in a location better suited to a retired couple?
Understanding your market can help you create an eye-catching advertisement that stands out from your competitors.

Portugal is a stunning country made up of many different regions. Offering your property as a seasonal rental allows visitors to experience the Portuguese way of life first-hand. It also gives you the chance to profit from your investment, provided you follow the regulations.

Whether you’re seeking a lucrative investment, a charming second home, a tranquil retirement retreat, or a family-friendly relocation destination, our iad Overseas property consultants can help you find your perfect Portuguese property.