The essentials
Short-term rental income in Portugal is taxed either under Category F (property income, flat rate of 28%) or Category B (business income, with coefficients from 0.15 to 0.95 depending on registration type). Category F is the default regime. For owners registered under a hotel activity code, the simplified Category B regime is considerably more advantageous: only 15% of gross revenue is taxable. The VAT exemption applies below €15,000 in annual turnover; above that threshold, the standard 23% rate likely applies. The CEAL was abolished from 1 November 2024 under Decree-Law no. 76/2024.
In November 2024, Portugal abolished the Extraordinary Contribution on Short-Term Rentals (CEAL) through Decree-Law no. 76/2024. If you had been expecting that change, it was welcome news. If you had never heard of it, it is equally good: you never had to pay it.
What has not changed are the regular tax obligations: personal income tax (IRS), VAT, and Social Security continue to apply to anyone operating a short-term rental in Portugal. This guide explains each one, with values updated for 2026 and the legal sources behind them.
If you are starting out or reviewing your tax position, the first thing to understand is which income category you fall under: Category F (property income) or Category B (business income). That answer shapes everything else.
Category F or Category B: the first tax decision
By default, short-term rental income in Portugal is taxed under Category F (rendimentos prediais — property income). Nothing needs to be done to trigger this: it applies automatically to anyone who has not formally registered a business activity with the Portuguese Tax Authority (AT). Article 8, paragraph 1 of the Personal Income Tax Code (CIRS) establishes that accommodation rental income is property income, unless the owner opts for taxation under Category B.
Category B requires an active decision: registering a business activity with the appropriate activity code (CAE) at the Tax Authority, declared either at the start of activity or through an amendment declaration. From that point, short-term rental income is treated as business or professional income.
The decision has significant implications for the tax burden. In simple terms:
- Under Category F: flat rate of 28% on net income (gross revenue minus specific deductions); option to include income in the progressive IRS rate schedule
- Under Category B: a coefficient is applied to gross revenue, substantially reducing the taxable base — but only if the rental is registered under a hotel or similar activity code
There is no universally correct answer. It depends on revenue volume, actual expenses, the owner’s total income, and the registered CAE code. What does exist is an analysis worth doing before filing any IRS declaration.
IRS under Category F: how it works
Under Category F, taxable income is gross revenue minus the deductions permitted under Article 41 of the CIRS: maintenance and repair works carried out in the previous 24 months, mandatory insurance against fire and civil liability, mandatory condominium fees, IMI (municipal property tax) and Stamp Duty. Not deductible: mortgage interest, furniture, appliances or property depreciation. The flat rate is 28% on net income; owners may elect income aggregation (englobamento) if their marginal bracket rate is below 28% (minimum existence threshold 2026: €12,880).
For the full 2026 IRS brackets, withholding tax tables, englobamento analysis and Modelo 3 completion steps (Annex F), see the complete guide to income tax on short-term rentals in Portugal.
IRS under Category B: the simplified regime and coefficients
Under Category B (simplified regime), a coefficient is applied to gross revenue instead of deducting actual expenses (Art. 31 CIRS). The standard coefficient is 0.35 for apartments and villas with CAE 55201 — only 35% of revenue is taxable income. For guesthouses and hostels with hotel-type classification, the coefficient is 0.15. The simplified regime applies up to €200,000 in annual turnover; above that threshold, organised accounting is mandatory.
For calculation examples, the Category F vs Category B comparison and the steps for filing Annex B (field 417), see the complete guide to income tax on short-term rentals in Portugal.
Containment zones: how they affect taxation
Short-term rental containment zones — established in the municipal regulations of Lisbon and Porto based on housing pressure ratios — primarily affect the ability to register new rentals. They also have fiscal implications.
The IRS simplified regime under Category B provides for an elevated coefficient of 0.50 for short-term rentals located in containment zones, instead of the standard 0.35 applicable to services not classified as hotel activities. This means 50% of gross revenue is treated as taxable income rather than 35%.
This rule is set out in Article 31 of the Personal Income Tax Code (CIRS), sub-paragraph h), introduced in the context of legislation on short-term rentals in areas of housing pressure (OE 2026 / Lei 73-A/2025, 30 December 2025).
For rentals registered under a hotel activity CAE code (coefficient 0.15), the containment zone status does not change the applicable coefficient. It remains 0.15.
VAT: when you are exempt and when you are not
Most short-term rental owners in Portugal are exempt from VAT under Article 53 of the VAT Code (CIVA). The 2026 exemption threshold is €15,000 in annual turnover, updated in March 2025 by Decree-Law 35/2025. Operators above this threshold are subject to the standard 23% rate — the 6% reduced rate applies to hotel establishments, a distinct legal category from short-term rentals.
For a full breakdown — the exemption regime, invoicing obligations, applicable VAT rate, and when voluntarily opting in can make financial sense — see our complete guide to VAT on short-term rentals in Portugal.
Social Security: who pays and how much
The obligation to contribute to Social Security depends on having a registered business activity. Owners taxed under Category F (without a registered activity) generally do not have Social Security obligations as self-employed individuals for their rental income.
Owners who have registered a Category B activity are either self-employed workers (trabalhadores independentes) or individual business operators (empresários em nome individual), with the following obligations:
When contributions start
Social Security contributions only begin from the first day of the 13th month after activity registration (Art. 145 of the Social Security Contributory Regimes Code). The first twelve months are contribution-free.
How the contribution is calculated
The calculation involves three steps:
- Relevant income (rendimento relevante): for short-term rentals classified as hotel or similar activity, the relevant income is 20% of declared revenue (Art. 162, para. 2). For other services, this would be 70%.
- Monthly contribution base: the quarter’s relevant income is divided by 3 to obtain each month’s base (Art. 163, para. 1).
- Contribution rate: 21.4% for self-employed workers (Art. 168, para. 1); 25.2% for individual business operators (Art. 168, para. 4).
Exemption for combined employment
A full exemption exists for owners who simultaneously hold employed status (with regular Social Security contributions through an employer) and whose rental income falls below 4 times the Social Support Index (IAS). ⚠️ The exact IAS values for 2026 should be confirmed with the Social Security authority.
The end of CEAL: what changed since November 2024
The Extraordinary Contribution on Short-Term Rentals (CEAL) existed between 2023 and October 2024. It applied to all owners with a registered short-term rental and was calculated based on revenue and property location.
Decree-Law no. 76/2024 abolished CEAL with effect from 1 November 2024. Owners who owed CEAL for periods prior to that date remain obligated to pay it. From that date onwards, the contribution ceased to exist.
This change removes a cost that weighed disproportionately on properties in high-demand tourist areas. Short-term rental taxation has simplified, but obligations under IRS, VAT, and Social Security remain.
IMI: the annual property ownership tax
The Municipal Property Tax (Imposto Municipal sobre Imóveis — IMI) is paid annually by all property owners in Portugal, regardless of whether the property is used for short-term rental or not. The IMI obligation exists as long as you own the property.
The rate is set by each municipality within the legally defined range: between 0.3% and 0.45% of the fiscal property value (Valor Patrimonial Tributário — VPT) for urban buildings. The Tax Authority (AT) issues the payment notification automatically. Payment deadlines: May (up to €100), May and November (€100–€500), May, August, and November (above €500).
IMI surcharge for short-term rentals in high-pressure zones
Municipalities in zones of high housing pressure have the power to apply an IMI surcharge of up to 100% on properties used for short-term rental (Art. 112, para. 19, sub-para. a) of CIMI, introduced by Law no. 56/2023).
The same law also amended Art. 44, para. 3 of CIMI to fix the obsolescence coefficient (coeficiente de vetustez) at 1 for all properties used as short-term rentals — removing the standard age-based VPT discount and increasing the taxable value for older properties. ⚠️ Always check with the local municipality whether this surcharge applies to your property.
IMI and tax deductibility
Under Category F, IMI paid during the tax year is a deductible expense, reducing the net taxable income (Art. 41 CIRS). Under Category B simplified regime, IMI is not directly deductible — the coefficient applied to gross revenue is designed to cover presumed expenses, including property taxes.
AIMI: additional tax on large property portfolios
The Additional Municipal Property Tax (Adicional ao IMI — AIMI) is a national annual tax that applies when total residential property holdings exceed certain thresholds:
- Single individuals: aggregate VPT above €600,000
- Married or co-habiting couples (joint taxation): above €1,200,000
- Companies and collective entities: 0.4% on all residential VPT (no exempt threshold)
Rates for individuals apply to the amount exceeding the threshold:
- Between €600,000 and €1,000,000: 0.7%
- Between €1,000,000 and €2,000,000: 1%
- Above €2,000,000: 1.5%
Short-term rental properties classified as residential in the property matrix count towards the AIMI threshold, unless the property is registered as commercial. AIMI is assessed automatically by the AT in June (Art. 135-G CIMI) and payment falls due in September (Art. 135-H CIMI).
Under Category B (simplified regime), AIMI is not deductible as an expense. Under Category F, AIMI is also not deductible as an expense — Article 41, para. 1 of the CIRS expressly excludes it, in the wording introduced by Law no. 56/2023. However, Art. 135-I of CIMI provides that AIMI may be credited against the IRS tax liability arising from property income — both under income aggregation (englobamento) and under the autonomous rate of Art. 72, para. 1(e) CIRS. This credit against tax owed is a different mechanism from a cost deduction: it does not reduce taxable income but offsets the tax bill directly.
Municipal tourist tax
The municipal tourist tax (taxa turística) is not a state tax. It is a per-person, per-night charge collected by the short-term rental operator on behalf of the municipality. The amount collected is passed directly to the local authority and does not form part of the operator’s income — it does not appear in the IRS declaration, does not count towards the VAT threshold, and is neither deductible nor taxable.
Current rates in major destinations (2025):
- Lisbon: €2 per person per night (up to 7 consecutive nights)
- Porto: €2 per person per night (up to 7 consecutive nights)
The tax must be itemised separately on the invoice issued to the guest. Each municipality sets its own rules and rates — always check with the local council for the current amount and exemptions.
Capital gains on property sale
Tax treatment of capital gains when selling a property used for short-term rental depends on when the sale occurs relative to the date the property exits the rental activity, and on whether the property is owned individually or through a company.
Exiting short-term rental does not trigger immediate tax
Removing a property from the short-term rental register no longer triggers immediate IRS liability. Taxation is deferred until the property is actually sold.
Sale within 3 years after exiting short-term rental
If the property is sold within three years of leaving the short-term rental activity, the capital gain is assessed under Category B (business income). A coefficient of 0.95 applies to the gain under Art. 31, para. 1, sub-para. h) CIRS — meaning 95% of the gain is included in taxable income and subject to the progressive IRS rates.
Sale after 3 years
Once three years have elapsed since exiting short-term rental, the sale is treated as Category G (capital gains by private individuals). Only 50% of the gain is included in taxable income, under Art. 43, para. 2 CIRS. This is the standard rule for residential property capital gains in Portugal.
Reinvestment exclusion (primary residence) does not apply to AL
The capital gains exclusion available when reinvesting sale proceeds into a new primary residence does not apply to properties used for short-term rental. This exemption is reserved exclusively for properties used as the owner’s primary permanent residence — which, by definition, short-term rentals are not.
Capital gains are declared in Annex G (Category G) or Annex B (Category B) of the IRS return (Modelo 3), submitted between April and June of the year following the sale.
IMT on property acquisition: the primary residence exemption risk
The Municipal Property Transfer Tax (Imposto Municipal sobre Transmissões — IMT) is a one-time tax paid at the time of purchase. It is not a recurring obligation. However, owners who purchased their property with an IMT exemption granted for primary residence use (Art. 9 CIMT) should be aware that converting the property to short-term rental within six years of purchase may void the exemption — making the previously exempt IMT immediately payable (Art. 11, para. 8, sub-para. a) CIMT). If you are in this situation, consult a tax lawyer or certified accountant before registering a short-term rental activity.
If you purchased the property at age 35 or under, the exposure may be greater: Decree-Law no. 48-A/2024 of 25 July (in force since 1 August 2024) created a full IMT exemption for the first primary residence acquisition by buyers aged 35 or under, up to a threshold of €316,772 (Art. 9, para. 2 CIMT) — significantly more generous than the standard HPP exemption threshold of €106,346. This extended exemption, which also covers Stamp Duty on the acquisition, likewise lapses if the property is converted to short-term rental within six years of purchase (Art. 11, para. 8 CIMT). Anyone who bought as a young buyer, benefited from this exemption, and is now considering registering a short-term rental should confirm the acquisition date before proceeding.
Practical example: €20,000 annual revenue
To illustrate the impact of different tax options, this example uses annual gross revenue of €20,000 from a short-term rental (no other income for the owner).
Scenario A — Category F (flat rate 28%)
- Gross revenue: €20,000
- Specific deductions (maintenance + insurance + IMI): €3,500 (estimate)
- Net income: €16,500
- IRS (28%): €4,620
- Social Security: none (no registered activity)
Scenario B — Category B, hotel activity (coefficient 0.15)
- Gross revenue: €20,000
- Coefficient: 0.15
- Taxable income: €3,000
- IRS (progressive rates — ⚠️ confirm 2026 brackets): at €3,000 taxable income, IRS will be minimal or near zero
- Social Security: relevant income = 20% × €20,000 = €4,000/yr → monthly base ~€333 → monthly contribution ~€71 → annual SS: ~€852
Simplified comparison (VAT excluded)
| Scenario | Estimated IRS | Estimated SS | Estimated total |
|---|---|---|---|
| Cat F (28% flat) | €4,620 | €0 | €4,620 |
| Cat B (coef. 0.15) | ~€390 (⚠️) | ~€852 | ~€1,242 |
The difference is significant. But the 0.15 coefficient only applies if the CAE code and AT classification support it. Category B also requires issuing receipts (recibos verdes), maintaining records, and filing quarterly declarations.
For higher revenues or situations with mortgage costs and substantial renovation works, the analysis changes. Consulting a certified accountant (contabilista certificado) with short-term rental experience is recommended before making any decision.
Free tool: use our Short-Term Rental Tax Simulator — calculate IRS, VAT, Social Security, IMI and Tourism Tax with your property’s actual figures
What to do next
If you have not yet reviewed your tax position, these are the starting points:
- Confirm whether you have a registered activity with the Tax Authority and what CAE code it uses
- Check whether your property is located in a containment zone in your municipality
- Compare Category F and Category B scenarios using your actual figures
- Confirm whether you are above or below the €15,000 VAT threshold
- Consult a certified accountant for definitive calculations
To understand whether short-term rental remains worthwhile after accounting for this tax burden — and how it compares with traditional long-term letting — read our analysis on does short-term rental in Portugal pay off.
If you would rather delegate the entire operation — including compliance with tax and legal requirements — professional short-term rental management is an option many owners find more efficient than managing everything independently.
Key Facts
Key facts — Short-Term Rental Taxes Portugal 2026
- CEAL: Abolished from 1 November 2024 (Decree-Law 76/2024). No extraordinary contribution applies to short-term rentals from that date.
- IRS — default taxation: Category F (property income), flat rate of 28% on net income. No business registration required.
- IRS — Category B option (hotel activity): With a registered activity and hotel CAE code, a coefficient of 0.15 applies under the simplified regime (only 15% of revenue is taxable). ⚠️ Depends on AT classification.
- VAT — exemption threshold 2026: €15,000 annual turnover. Below this, automatic exemption (Art. 53 CIVA, DL 35/2025). Above €15,000, the standard 23% rate likely applies — not the 6% rate reserved for hotel establishments.
- Social Security: For rentals classified as hotel activity: relevant income = 20% of revenue. Rate: 21.4% (self-employed). First 12 months are contribution-free.
- Deductible expenses (Cat F): Maintenance, insurance, IMI, mandatory condominium fees, stamp duty. Not deductible: mortgage interest, depreciation, furniture.
- IMI (annual property tax): Rate: 0.3%–0.45% of VPT, set by each municipality. Deductible under Cat F (Art. 41 CIRS). Municipalities in high-pressure zones may apply a surcharge of up to 100% for AL properties (Law 56/2023, Art. 112, para. 19 CIMI).
- AIMI (additional property tax): Applies to individuals with aggregate residential VPT above €600,000. Rates: 0.7% (€600k–€1M), 1% (€1M–€2M), 1.5% (above €2M). Assessed in June (Art. 135-G CIMI), payable in September (Art. 135-H CIMI). Not deductible as an expense; under Cat F, creditable against IRS tax liability (Art. 135-I CIMI).
- Capital gains on sale: Within 3 years of exiting AL: Cat B, coefficient 0.95 (95% of gain taxable). After 3 years: Cat G, only 50% of gain included in taxable income (Art. 43 CIRS). No reinvestment exclusion for primary residence.
Frequently Asked Questions
Category F (property income) taxes short-term rental income at a flat rate of 28% on net income, with no need to register a business activity. It applies by default. Category B requires registering a business activity and applies a coefficient to gross revenue — if the rental is registered under a hotel activity code, only 15% of revenue is taxable. For higher revenues with few deductible expenses, Category B tends to be significantly more favourable. The decision should be evaluated with a certified accountant.
Under Category F, deductible expenses include: maintenance and repair costs (including works completed up to 24 months before the rental started), rental insurance, mandatory condominium fees, IMI paid during the fiscal year, and stamp duty on the income. Not deductible: mortgage interest, property depreciation, or expenditure on furniture, appliances, and decoration. Under Category B (simplified regime), actual expenses are not deducted — a coefficient is applied to gross revenue instead.
There is no official simulator specific to short-term rentals, but a basic estimate is possible: under Category F, subtract deductible expenses from gross revenue and apply 28%; under Category B with a hotel CAE code, multiply gross revenue by 0.15 and apply the applicable IRS rate. For a personalised calculation that accounts for total income, personal deductions, and Social Security, a certified accountant will provide the most reliable estimate.
Yes, provided annual turnover did not exceed €15,000 in the previous calendar year (threshold updated by Decree-Law no. 35/2025). Below this threshold, the exemption under Article 53 of the VAT Code applies automatically. Above €15,000, the standard rate of 23% likely applies — the 6% reduced rate reserved for hotel-type establishments does not apply to short-term rentals regulated by Decree-Law no. 128/2014. See our complete VAT guide for short-term rentals for full details.
Social Security contributions begin from the first day of the 13th month after registering the business activity. The first twelve months are contribution-free. After that, for rentals classified as hotel or similar activities, the calculation uses 20% of revenue as the relevant income base, divided by 3 for each monthly contribution. The rate is 21.4% for self-employed workers.
CEAL (Contribuição Extraordinária sobre o Alojamento Local) was an extraordinary levy introduced under the Mais Habitação programme that applied to short-term rental revenue. It was abolished by Decree-Law no. 76/2024 with effect from 1 November 2024. From that date, CEAL no longer exists. Owners with rental income after November 2024 have no obligation to pay this contribution.
Containment zones (defined in the municipal regulations of Lisbon and Porto) primarily restrict new short-term rental registrations. Under Article 31, sub-paragraph h) of the Personal Income Tax Code (CIRS, OE 2026), the simplified Category B regime applies an elevated coefficient of 0.50 to rentals in containment zones, increasing the taxable base. Rentals registered under a hotel CAE code (coefficient 0.15) are not affected.
Exiting the AL register no longer triggers immediate tax. If the property is sold within three years of leaving AL activity, 95% of the gain is taxable under the progressive IRS rates (Category B). If sold more than three years after exiting, only 50% of the gain is included in taxable income as Category G capital gains (Art. 43, para. 2 CIRS). The reinvestment exclusion available for primary residences does not apply to short-term rental properties.
Yes, IMI (Municipal Property Tax) applies to all property owners regardless of rental activity. The annual rate is set by the municipality between 0.3% and 0.45% of fiscal property value (VPT). Under Category F, IMI is deductible. AIMI only applies if your total residential property portfolio exceeds €600,000 in VPT. AIMI is not deductible under either Category F or Category B.