Short-Term Rental Taxes in Portugal: Complete Guide for 2026 (IRS, VAT, Social Security)

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

For owners who have not registered a business activity, short-term rental income is taxed as property income. The rate is 28% on net income, calculated as follows:

Taxable income = Gross revenue − Specific deductions (Art. 41 CIRS)

The 28% rate applies autonomously — it does not aggregate with other income. However, there is an option: englobamento (income aggregation). By choosing to aggregate, property income is added to all other income and becomes subject to Portugal’s progressive IRS rates under Article 68 of the CIRS. In 2026, the minimum existence threshold is €12,880 (below which no IRS applies).

2026 IRS brackets — Continente (Art. 68 CIRS)

Bracket	Taxable income (€)	Normal rate	Average rate
1st	Up to 8,342	12.5%	12.5%
2nd	8,342 – 12,587	15.7%	13.579%
3rd	12,587 – 17,838	21.2%	15.823%
4th	17,838 – 23,089	24.1%	17.705%
5th	23,089 – 29,397	31.1%	20.579%
6th	29,397 – 43,090	34.9%	25.130%
7th	43,090 – 46,566	43.1%	26.472%
8th	46,566 – 86,634	44.6%	34.856%
9th	Above 86,634	48%	—

Source: Art. 68 CIRS — Portal das Finanças. Residents in Madeira and the Azores are subject to lower regional rates (see below).

Aggregation can be advantageous when total income is low (falling in brackets below 28%) and when personal tax deductions are substantial. For owners with higher overall income, the flat 28% rate tends to be more favourable.

Withholding tax tables 2026 — reference by region

Withholding tables (tabelas de retenção na fonte) are used by employers to calculate the monthly tax withheld from employment income (Category A). For short-term rental owners who also have employment income, these tables show the marginal and effective rate applied to their monthly salary — useful context when considering whether to aggregate rental income with other income.

Table I — Continente (single without dependants / married 2 earners)

Monthly gross salary (€)	Marginal rate	Max. effective rate
Up to 920	0%	0%
Up to 1,042	12.5%	5.3%
Up to 1,154	15.7%	7.5%
Up to 1,212	21.2%	8.1%
Up to 1,819	24.1%	13.5%
Up to 2,119	31.1%	16.0%
Up to 2,499	34.9%	18.8%
Up to 3,305	38.36%	23.6%
Up to 5,547	39.69%	30.1%
Up to 20,221	44.95%	40.9%
Above 20,221	47.17%	—

Table I — Madeira (single without dependants / married 2 earners)

Monthly gross salary (€)	Marginal rate	Max. effective rate
Up to 980	0%	0%
Up to 1,028	8.72%	1.5%
Up to 1,201	12.04%	3.9%
Up to 1,623	17.63%	7.5%
Up to 2,332	22.3%	12.0%
Up to 3,203	22.42%	14.8%
Up to 3,614	27.27%	16.3%
Up to 6,954	28.02%	21.8%
Up to 21,411	29.24%	26.8%
Above 21,411	32.78%	—

Table I — Azores (single without dependants / married 2 earners)

Monthly gross salary (€)	Marginal rate	Max. effective rate
Up to 966	0%	0%
Up to 1,042	8.75%	2.3%
Up to 1,154	10.99%	4.0%
Up to 1,212	14.84%	4.5%
Up to 1,819	16.87%	8.6%
Up to 2,119	21.77%	10.5%
Up to 2,499	24.43%	12.6%
Up to 3,305	26.85%	16.1%
Up to 5,547	27.79%	20.8%
Up to 20,221	31.46%	28.5%
Above 20,221	33.02%	—

Source: 2026 withholding tax tables (Continente, Madeira and Azores, Category A — Table I). Figures refer to monthly employment salary, not annual short-term rental income.

Deductible expenses under Category F

Permitted deductions in Category F are listed in Article 41 of the CIRS. They include:

• Maintenance and repair costs (including works carried out up to 24 months before the rental started)
• Rental insurance premiums
• Mandatory condominium fees (the portion relating to shared building expenses)
• Municipal property tax (IMI) paid during the relevant fiscal year for that property
• Stamp duty on the rental income

What is not deductible under Category F:

• Financing costs (mortgage interest or loan repayments)
• Property depreciation
• Furniture, appliances, or comfort and decoration items

This limitation matters for owners with a mortgage on the property: financing costs do not reduce the taxable base under Category F.

IRS under Category B: the simplified regime and coefficients

Under Category B, most short-term rental owners use the simplified regime (regime simplificado). In this regime, taxable income is not based on actual expenses but on the application of a coefficient to gross revenue.

The applicable coefficient depends on how the activity is registered at the Tax Authority:

• Coefficient 0.15 — applies to “service provision within hotel and similar activities, restaurants and beverages” (Art. 31, para. 1(a) CIRS). For a short-term rental registered under the correct hotel CAE code, only 15% of gross revenue is taxable income.
• Coefficient 0.35 — applies to service provisions not covered by another category. If the rental is not classified as a hotel activity, this is the standard coefficient.
• Coefficient 0.95 — applies to the “positive result of property income” within Category B. If the Tax Authority treats the rental income as property income within Cat B (as per Art. 31, para. 4), the coefficient is 0.95 — making Category B substantially less favourable than simple Category F taxation.

⚠️ Important note: the correct coefficient depends on how the activity is registered and how AT classifies it. The 0.15 coefficient requires the rental to be registered under a hotel or similar activity code (e.g., CAE 55201, 55202) and accepted as such by the Tax Authority. If AT classifies it differently, the 0.95 coefficient may apply. Confirmation from a certified accountant (contabilista certificado) is strongly recommended.

The simplified regime applies automatically when annual turnover did not exceed €200,000 in the two preceding years. Above that threshold, organised accounting (contabilidade organizada) is mandatory.

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 exemption applies when annual turnover did not exceed €15,000 in the previous calendar year.

This threshold was updated by Decree-Law no. 35/2025, which came into force on 29 March 2025. Previous thresholds were:

• €13,500 in 2023
• €14,500 in 2024
• €15,000 from 2025 onwards

Much of the information available online still references outdated figures. For 2026, the threshold is €15,000.

Operators in the exemption regime do not charge VAT on their services, but they also cannot reclaim VAT on purchases. Invoices must state “IVA – regime de isenção” (VAT exemption regime), as required by Art. 57 CIVA.

When revenue exceeds €15,000, the VAT exemption no longer applies. The CIVA List I, item 2.17 provides for a reduced rate of 6% on “accommodation in hotel-type establishments” — but short-term rentals regulated by Decree-Law no. 128/2014 are not legally hotel establishments (governed instead by Decree-Law no. 80/2017). The two legal frameworks are distinct.

Without a specific classification that places them within “hotel-type establishments”, operators whose revenue exceeds €15,000 are likely subject to the standard rate of 23% rather than the 6% reduced rate.

⚠️ To obtain certainty on the rate applicable to your specific situation, the appropriate route is a binding ruling (pedido de informação vinculativa) addressed to the Tax Authority (AT) — free of charge, response within 150 days — or consultation with a certified accountant experienced in short-term rentals.

Operators who are exempt but wish to voluntarily waive the exemption (for example, to recover VAT on renovation works) may do so, but must remain in the VAT regime for a minimum of 5 years (Art. 55, para. 3 CIVA).

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:

1. 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%.
2. Monthly contribution base: the quarter’s relevant income is divided by 3 to obtain each month’s base (Art. 163, para. 1).
3. 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.

What to do next

If you have not yet reviewed your tax position, these are the starting points:

1. Confirm whether you have a registered activity with the Tax Authority and what CAE code it uses
2. Check whether your property is located in a containment zone in your municipality
3. Compare Category F and Category B scenarios using your actual figures
4. Confirm whether you are above or below the €15,000 VAT threshold
5. Consult a certified accountant for definitive calculations

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