UPDATE Article - 02-07-2019
One of the ideas people have when they purchase a house or apartment, particularly if it's an investment for the future, is to let it out for periods of the year as a holiday rental accommodation, or in Portuguese Alojamento Local. Much has been said over recent years about the issue and Portuguese legislation has changed quite frequently, and it must be said quite confusingly, over that time.
It’s not possible in an UPDATE article to lay out all the requirements of Alojamento Local operators, and of course the best way to go about starting such an activity is to seek help from professionals who can help you in this process, such as accountants and lawyers. However if you are considering Alojamento Local, or AL, as a way to make the most out of property you won, there are a few things you should consider before taking the step to start registering and operating your new business.
Open your activity:
Before starting to provide local accommodation services you must open your activity in Finanças (AT – Autoridade Tributária). You can open the activity at any branch of the Tax Authority (AT) or through the portal at http://www.portaldasfinancas.gov.pt , following the steps: Cidadãos»Serviços»Início de Atividade»Entregar Declaração.
Like any self-employed person you will have to issue invoices-receipt through the Finanças Portal and if the renter is a foreigner, you must inform SEF of their entry and departure and collect some basic information from your guest.
If your rental income exceeds an annual gross income of more than € 10,000 in 2018, you will have to collect VAT at the rate of 23% (18% in the Azores and 22% in Madeira) on your receipt invoices. In this case, you will also have to hand over quarterly the amount charged to the State and fill in the respective VAT return
Having an open activity as a self-employed person may require payment of Social Security contributions. However, if the Local Accommodation is an exclusive activity, there is no place to pay contributions. You must make sure that you are correctly advised about this before you start, to ensure that you don’t fall foul of the authorities.
If you earn your money in Portugal, regardless of where the renter actually pays you, you must declare the income in Portugal and pay any tax due to the Portuguese authorities. Again it is essential that you take the correct advice about this, because the penalties can be very high indeed.
In Portugal it is a requirement to hold an AL number and to display the AL sign on the wall of your accommodation. Not only is this important for you to carry on your activity, but also to advertise your property on the internet or with such services as Air BNB for example. If you do not declare your AL number you can’t advertise your property on many of the sites and the authorities may well look on-line for people advertising holiday accommodation privately and check to see if it is registered.
In case of the guest's cancellation, any non-refundable reservation fees are also subject to tax.
If you have opted for taxation according to the rules of category F in the IRS code, you can deduct expenses from housekeeping, condominium, municipal property tax (IMI), cleaning services and commissions with short-term renting platforms, among others. However only certified expenses are accepted with the respective invoice.
End of Activity:
You can of course decide to halt your activity at any time, but from the moment you terminate the local accommodation activity you have 30 days to communicate to Finanças the cessation.
You can do it in a Finance office or through their on-line portal.
Of course there are many other things to consider, such as rules in condominiums for apartments rented to holiday makers, cleaning services and safety requirements etc. We do have information in the afpop office that will help Members who might be thinking about renting to holiday makers, but these are some of the things you might think about before deciding to start renting your villa or apartment as a business.