Letting – tax increase from 5% to 28

The Portuguese government wants to tax “local holiday accommodation” (Alojamento Local), which includes private holiday accommodation and guest rooms, at 28% in future. The proposal is still under consideration and should come into force in the 2017 budget year. The Minister of Economy and Environment (who is also responsible for housing and rentals) has already agreed. Now the proposal is on the desk of the Minister of Finance.

The change is to be made in such a way that tourist and short-term rentals will be given the same business code as long-term rentals and thus also be taxed at 28% instead of only 5%.

The plan to encourage many private providers to legalise their holiday homes and register them as AL has worked quite well with taxation on letting at only 5%. The small blue signs with “AL” on the house walls could be found more and more often.

However, it was foreseeable that the joy should only be of short duration and all registered landlords were correctly asked to pay. Should the project be to the liking of the government, this source of income could become one of the largest in the budget of Portugal 2017.

The growth in visitor numbers and overnight stays, not only in the Algarve, but also in the Lisbon and Porto regions, is enormous.

It’s safe to assume that the majority of the Algarve’s population, who have a sign with “Aluga-se” (for rent) hanging on it, will then neither report the arrival of guests nor pay the tax on rentals. Recently, the landlord has been required to report the arrival of guests to the Service for Foreigners and Borders (SEF – Servico de estrangeiros e fronteiras) before they arrive.

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