The dream that sells the house
It goes like this: you buy the house on the Lisbon coast or in the Algarve, you use it for the summer and the long weekends, and while you are away it pays for itself on Airbnb. Sometimes that math works beautifully. Sometimes the house sits half empty, the licence never arrives, and the tax bill is a surprise. The difference is almost always homework done before the purchase, not after.
The licence: Alojamento Local
In Portugal, the moment money changes hands for a night's stay, you are running a business. Every property let to tourists needs an Alojamento Local number, AL for short, and that number has to appear in your listing. You register with the local câmara (council).
The good news: the regime settled down at the end of 2024. Decree-Law 76/2024 scrapped the nationwide freeze on new registrations and the five-year renewal requirement. Registrations no longer expire, and they generally pass to the new owner when the property is sold or inherited.
The catch: the decision moved down to the councils. Each câmara can designate containment zones where no new AL licences are issued, and the busy coastal parishes were the first to use that power. Lisbon suspended new licences across the whole municipality; parts of Porto are restricted too. And since May 2026, an EU regulation obliges the platforms to check your registration number against the national database and to share booking data with the authorities. Listings whose numbers do not stand up get pulled.
So the only binding answer is the council's, and you want it before you sign the deed, not after. This is the single most important check for anyone buying with rental income in mind.
The taxes, from the Portuguese side
Your home country's tax is a separate conversation. Here is what Portugal will ask for.
Income from AL is taxed under IRS Category B, as self-employment income: either the simplified regime or organised accounting. Under the simplified regime, which covers income up to €200,000 a year, you do not deduct actual expenses. Instead a coefficient is applied to your gross income: 0.15 for renting a room, 0.35 for an apartment or a house, and 0.50 for properties in certain municipal containment areas. That taxable amount is then taxed at the progressive IRS rates for residents, or a flat 25% for non-residents.
Then the extras. Accommodation carries reduced IVA of 6% on the mainland. Many municipalities charge a per-night tourist tax that you must collect and pay monthly: Lisbon charges €4 per person per night, capped at seven nights. Commissions paid to non-resident platforms such as Airbnb have their own reporting (Modelo 30), with VAT self-assessed under the reverse-charge mechanism.
And the operating duties: foreign guests must be reported to the immigration database (SIBA) within three working days of arrival and departure, civil liability insurance is mandatory, along with minimum safety equipment and a complaints book, physical and electronic. None of this is optional, and non-compliance can mean fines or losing the licence.
One more thing people discover late: if you stop the AL activity and sell soon after, the capital gain can fall under Category B rules, which are harsher than the normal treatment for selling a property. Ending the activity and selling in the same breath is a conversation to have with your accountant first.
The honest math
Even where the licence and the taxes are straightforward, run the numbers cold. A management company handling bookings, check-ins, cleaning and the inevitable late-night plumbing call takes a meaningful cut. Cleaning and laundry cost real money between every stay. Occupancy outside July and August looks nothing like occupancy inside it. And a house that hosts forty groups a year wears faster than a house that hosts your family.
None of this kills the idea. It just means the rental income should be the bonus, not the reason the purchase works. If the house only makes sense at 80% occupancy and peak-season rates, it does not make sense.
How I help
If renting while you are away is part of your plan, say so at the start, because it changes what we look for. Before anything else, I check the council's position on new AL licences for the exact parish. A beautiful apartment in a containment zone with no existing licence is not a rental investment, whatever the listing implies.
Then we do the cold math together: realistic occupancy, real costs, the tax picture above, and what the property earns if the season disappoints. I introduce you to a Portuguese accountant before the deed, not after the first tax bill, and to managers who actually answer the phone.
The goal is simple: that the house works as a home first, and that the rental income is real money, declared and compliant, rather than a hope with a tax bill attached.
Sources
- Every tourist let needs an Alojamento Local registration number shown in the listing; Decree-Law 76/2024 (in force 1 November 2024) ended the freeze on new registrations and the five-year renewal, and councils retain containment-zone powers (on-magazine.co.uk; lisbonapartments.com)
- Since May 2026, an EU regulation obliges platforms to verify registration numbers against the national database and share booking data with the authorities (on-magazine.co.uk)
- AL income under IRS Category B: simplified regime up to €200,000/year with coefficients 0.15 (room), 0.35 (apartment/house), 0.50 (containment areas); progressive rates for residents, flat 25% for non-residents (Airbnb tax guide for Portugal at assets.airbnb.com, PDF)
- Reduced IVA of 6% on accommodation, tourist taxes collected monthly (e.g. Lisbon €4/person/night), Modelo 30 reporting for platform commissions, SIBA guest reporting, mandatory liability insurance and complaints books (belionpartners.com)