Renting out your property to tourists in Portugal can be a profitable venture, but it's essential to understand the necessary steps to comply with local regulations. In this guide, we'll walk you through the process of opening a local accommodation service activity, registering with the Tax Authority, Social Security, and obtaining a local lodging license.
Opening Activity with Finanças (Tax Authority)
To rent out your property to tourists, you need to open a local accommodation service activity (Category B) either through the Tax Authority Portal or at a tax office. There are no associated costs for this process.
You can choose between:
- CAE55201 (for furnished accommodation for tourists)
- CAE55204 (other short-term accommodation)
If you rent the property through foreign websites such as Airbnb, Booking, VRBO, or others, activate the option for intra-community acquisitions immediately.
Social Security - Pay Attention to Discounts
When you start providing local accommodation services, you are automatically registered with Social Security, which means that you have to start paying the respective monthly contributions.
Our tip: If you are a dependent worker, you can ask for an exemption if you have already paid Social Security or if you are retired.
Town Hall - Applying for a Local Lodging License
Registering your property for local accommodation is mandatory by law. You can do so by communicating with the respective Town Hall through the electronic one-stop-shop. Some city halls in the country are already starting to apply a cost for local lodging licenses. To obtain a license, you need to present some documents, and your local accommodation establishment registration number is automatically generated. The data is also automatically sent to the Portuguese Tourism Office and the National Register of Local Lodging (RNAL).
The necessary documents for local lodging registration are:
- Copy of the property owner's identification document
- Copy of the property book
- A signed term of responsibility by the property owner, guaranteeing the suitability of the property for the provision of lodging services
Once you have the document with the registration number, you can start receiving guests and appear on booking platforms (where you must associate the registration number with the ad). Keep in mind that after registering the activity with the Department of Finance and the prior communication, the City Council has 30 days to conduct an initial inspection of the property and confirm the registration information. However, you do not have to wait to open the space to the public. Other inspections can then take place, requested by the municipality or ASAE to the Tourism of Portugal.
Choose our services, and we will take care of this process for you.
Inspection - Mandatory and Essential Requirements
During the first inspection of your local accommodation, the municipality will confirm that it complies with the law and meets the safety rules against fire hazards.
Safety and Emergency Equipment
Your local accommodation, whether it's an apartment or a villa, must have essential safety and emergency equipment. For properties with a capacity of 10 users or less, these requirements include:
- A fire extinguisher and fire blanket
- First aid equipment
- The national emergency number (112) displayed in a visible location
Avoiding Fines and Meeting Additional Requirements
To avoid fines, it is necessary to have a Complaints Book, which can be purchased from the Imprensa Nacional Casa da Moeda. Additionally, your local accommodation must meet the following requirements:
- Good conditions of conservation and operation of facilities and equipment
- Hot and cold running water
- Windows that face the outside
- Adequate furnishings, equipment, and utensils
- Satisfactory hygiene and cleanliness conditions
To make the process easier, you can purchase the Local Lodging kit from our Online Store.
By ensuring that your property meets these essential requirements, you can provide a safe and comfortable experience for your guests, avoid fines, and enjoy a successful local accommodation business in Portugal.
SEF - Communication
When providing temporary leases to foreign citizens, you must inform the Foreigners and Borders Service (SEF) about their stay within a maximum of three working days (after entry and exit). You can do this through an accommodation bulletin or directly on the SEF Portal. The required data for each guest includes:
- Full name
- Date of birth
- Passport or identification document number
- Country of origin
- Dates of arrival and departure from local accommodation
Host Wise offers a Welcoming Guest service that handles this issue, included in our complete management model.
Portal das Finanças - Issuing Invoice Receipts
Whenever you receive payment from a client for a provision of services, you are required to issue an invoice-receipt online through the Finance Portal. Alternatively, you can issue an invoice for that amount through a certified program or have a receipt book with a certified printer and your own TIN and address.
Remember that if you do not send invoices on the Finance Portal, you must report to the tax authorities by uploading the SAF-T file on the electronic invoice. This should include the receipts you issued in the previous month by the 20th of each month.
IRS - Taxes Payable
As a local accommodation owner, you need to enter the amounts you received and for which you issued a receipt on your IRS tax return. We recommend that you do some calculations before making decisions that will influence the taxes applied to your local lodging income.
First, you can opt for the simplified regime (for a turnover of up to 200,000 euros per year) or organized accounting (mandatory for income over 200,000 euros per year). If you opt for the simplified regime, your income from local accommodation will be taxed at 35%, assuming that the remaining 65% corresponds to expenses you had with the local accommodation activity.
If you opt for organized accounting, you will have to calculate all expenses related to local accommodation (which should be properly documented) and subtract this amount from the total income from the activity. The result will be the target tax amount. If you opt for organized accounting, you will need to hire a chartered accountant.
By complying with these additional requirements, you can ensure that your local accommodation business in Portugal operates legally and avoids any potential fines or penalties.
Alternative Taxation Options
There is also a recent option, created with the State Budget for 2017, to tax local accommodation income through Category F rules (rental income). With this option, you can deduct expenses (condominium fees, renovations, property tax, water, electricity, and telecommunications bills) and apply a 28% tax rate on the invoiced amounts (after deducting expenses). Alternatively, you can choose to include local accommodation income if your tax rate is lower than 28%. Keep in mind that this option must be made annually.
VAT Exemptions and Rates
Regarding VAT, there is an exemption for up to 10,000 euros of annual invoicing in the simplified regime. Above this amount, you must pay VAT at a rate of 6% (5% in Madeira and 4% in the Azores). In terms of VAT, it's essential to do some calculations to determine the most advantageous option for you. If you need to pay VAT, you can also deduct the tax paid on local accommodation expenses, such as the 23% expenses for furniture, household items, detergents, etc. In other words, you settle the VAT at 6% but deduct at 23%.
By considering these alternative taxation options and understanding the relevant VAT exemptions and rates, you can make informed decisions that will help you maximize the profitability of your local accommodation business in Portugal.