Alojamento Local

If you purchase a house in Portugal that you’re not going to use as your main residency, at least not in the short term, you may want to grab the chance of getting a return on your investment by renting it out to tourists. This activity is called in Portugal “alojamento local”.

Portugal is one of the most sought-after tourism destinations in Europe, generating many business opportunities. Its diversified landscape ranges from the mountainous north to the warm, plain south lined with long golden beaches in the Algarve and includes the paradisiac, unspoiled islands of the Azores archipelago and the sunny, colorful Madeira islands. In its cities, among the safest to visit, tourists can feel the Portuguese genuine hospitality and experience the taste of delicious gastronomy and surprisingly unique wines. 

Changes Alojamento local 2022

An important information upfront. The Supreme Court of Justice (STJ) ruled in April 2022 that multi-family houses can not have alojamento local (local accommodation), which could lead to the disappearance of part of the existing activity. There is also doubt whether the local authorities will continue to be able to grant new residential building permits in buildings where the building title is that of a permanent dwelling. 

From now on, according to the ruling, any condominium owner can demand an end to this type of activity in the building where he or she lives, regardless of whether the local accommodation has been operating for years. It is expected that there will be many lawsuits requesting the illegality of the practice in so-called horizontal properties (multi-family homes) and the Government is already analyzing the impact of this ruling in the sector as the current laws are not clear and there is a need for clarification. So if you are considering buying a single apartment for alojamento local purposes you should check the condominium ruling as well as the local city hall practice in passing out new licenses.


Alojamento Local or AL (that translates literally to “Local Accommodation”) establishments in Portugal are those that provide temporary accommodation services, namely to tourists, for remuneration, as long as they don’t meet the requirements to be considered tourist resorts. In simple terms, it corresponds to the commercial use of a small property for short-term rentals to tourists, mostly by people natural to the region.

When you purchase a property in Portugal in order to rent it to tourists, there are many options, as tourism is well established in most parts of the country. The Atlantic coast, Porto, Lisbon, or the Algarve are always good choices. 

In order to get a better feeling for the entire country, we analyzed current offers for short-term renting on platforms like Airbnb, Booking, etc. We did not analyze hotel capacities and ratings.  The analysis took two factors into consideration: 

  • how many offers are available in a certain municipality;
  • how many ratings do the offers have? 

The hypothesis behind the second factor is that the actual number of bookings correlates with the number of ratings. Almost half (47 percent) of all internet users worldwide say they post reviews about a product, company, or service each month (GlobalWebIndex, 2019). We created a matrix based on the BCG concept with 9 fields. Each factor was separated into 3 sections based on statistical cut-off points.  

We believe the matrix is a good tool to help evaluate areas that are strong in demand and supply of short-term offers, as well as identifying areas that have demand but are still less developed in offers. The analysis is backward-oriented as the offers are already on the market and the ratings have been done. Demand and supply could change in all areas, which is the information we will also include in the upcoming works. 

If you have any questions, doubts, or remarks please let us know. Please note that the matrix is a part of the full picture and should not be considered the only source of information. We always recommend a more detailed analysis of the market before you make an investment decision. We are happy to help in this step as well.

Types of alojamento local

Tourists coming to Portugal choose a specific type of AL to be accommodated in depending on their vacation goals: it might be the destination as a whole, the proximity to the historic center and most appetizing restaurants and foodie spots, a comfortable and spacious place to stay, services and amenities or privacy, among other things. Portuguese offer is vast and contemplates all sorts of needs and tastes.

The AL establishments are categorized according to the types of units of accommodation and include:

  • Residences: the accommodation unit is an autonomous building of single-family character;
  • Apartments: the accommodation is an autonomous fraction of a building or part of an urban building susceptible to independent use. The feasability of the reting in apartments has to be check wit the condominium and the city hall;
  • Lodging establishments (like hostels): the lodging units consist of up to 9 rooms (or up to 30 clients), integrated into an autonomous fraction, in an urban building or part of an urban building susceptible of independent use;
  • Rooms: accommodation consisting of up to 3 rooms within the owner’s property.

What are the capacity limits of an alojamento local?

AL establishments may have a maximum capacity of 9 rooms and 30 users, with the exception of hostels, which have no capacity limit, and rooms, that can only be 3 in the owner’s residence.

In terms of users, AL capacity is determined by the characteristics/size of the dwellings. It cannot exceed the number resulting from multiplying the number of rooms by 2. In the case of apartments and houses, it’s possible to accommodate 2 additional users in the living room. In all types of housing,  provided there are living conditions, up to 2 additional beds can be installed for children up to 12 years of age.

How many apartments can be allocated to alojamento local in a building?

Under the AL apartment modality, each owner or alojamento local operation holder may operate more than 9 units per building if they do not exceed 75% of the number of its existing fractions or independent parts

For the purpose of calculating the number of units, apartments registered in the name of the spouse, descendants, and ascendants of the owner or operation holder are considered, as well as those registered in the name of different legal entities, where there are common shareholders.

What price should you charge for your AL?

Once you have concluded your initial research, you will have a general idea of the price to charge for your alojamento local. The value you establish should take into account two important factors:

  • Be within a price range that can compete successfully with other short term rentals in the same category as yours;
  • Not underestimate the importance of your unique value offer – be it an outstanding service, an unforgettable experience, or a truly unique location and surroundings. Price isn’t the only factor!
  • Set a pricing strategy and seasonal accommodation rates.

Calculate an average price per night that takes into account fixed costs. Setting up a pricing strategy assures your alojamento local won’t be out on the market at a rate that’s lower than it should.

Establish which will be the high and the low season, according to the calendar and the demand for your specific alojamento local location characteristics (for instance, in the mountains of Serra da Estrela, winter is considered a high season because Serra is a snow destination). Don’t forget to check out all the festive days and holidays, not only in Portugal but also in your international client’s country of origin. Adjust your rates according to these factors.

Essential steps to starting an AL in Portugal

  • Step1: Confirm if the building/house is in an AL authorized zone

While AL has benefited Portugal by boosting the renovation of the historical center of the cities, it has also contributed to pushing away many of the inhabitants of the traditional neighborhood to the outskirts in order to replace traditional rented houses for alojamento local accommodations. 

To preserve the social reality of the neighborhoods and favor affordable rent and neighborhood commerce, Portuguese municipalities can define containment zones (zonas de contenção), which are all those that exceed 25% of the available housing allocated to alojamento local. There are also temporary suspension zones for areas between 10% and 20% of the available housing related to this activity.

In these zones a limit is set on the number of alojamento local establishments – a single owner can only operate a maximum of 7 lodgings and the corresponding licenses are personal and non-transferable.

There are also forbidden areas, meaning that certain neighborhoods are not granting any more licenses for new alojamento local businesses. If your goal is to buy a house in Portugal in order to set up an AL, you really must go to the City Hall to check the license granting situation.

  • Step 2: Know that the condominium board has decision-making power

If you want to open a hostel AL in a building on horizontal property with autonomous fractions, with several owners, you can only do so with the authorization of the other condominium owners. Due to the recent court ruling in 2022 you should also ask the city hall if they pass an AL license for the respective apartment. However, if more than half of the condominium owners (taking into account the per mileage) oppose the accommodation, it will be closed even later on. This can happen if there is proof of “repeated and proven practice of acts that disturb the normal use of the building, as well as acts that cause nuisance and affect the rest of the condominium” to the municipal council.

  • Step 3: Open an independent activity at the tax office

After having obtained your Portuguese tax identification number (NIF), you have to go to the Portuguese Tax and Customs Authority (AT) portal or to a tax office to declare the opening of your activity as an independent contractor (Atividade Independente). Although you can do that online, we recommend registering on-site, as the online process isn’t that simple and most probably you’ll have doubts that can be answered on-site.

You have two options regarding your income declarations and taxation:

  • Category B (self-employed, business, and professionAL income): start an activity with the code of economic activity (CAE) 55201 – furnished accommodation for tourists, or CAE 55204 (other short-stay accommodation). If the income you make is up to 200 000 euros, you will be framed under the simplified tax regime. If the income surpasses that amount, you are obliged to have an organized accounting system, with a professionAL accountant.
  • Category F (property income): for taxation purposes, all your income can be considered or, in the alternative, choose to tax the property at a 28% rate.

Depending on your specific situation, the best option may not be obvious. We suggest seeking professionAL advice from an accountant for this decision since it will have an impact on your finances.

  • Step 4: Register the alojamento local

The registration of alojamento local establishments is a necessary and compulsory condition for their operation. The registry process starts with prior communication with a deadline addressed to the mayor of the municipality in which administrative area your alojamento local is located.

This prior notice must include information such as the valid title of use of the property, the name adopted by the alojamento local establishment, its modality, and the capacity of rooms, beds, and users. It has to include several documents, among which are a term of responsibility, copies of the urban land register, copies of the declaration of commencement of activity of the holder, and minutes of the assembly of condominium owners testifying that they authorize the installation (for hostels).

You can proceed to the registry by accessing the Balcão do Empreendedor (BdE – meaning “Entrepreneurs’ Counter”), accessible through the EPortugal Portal, through the Tourism of Portugal Portal at the Registo Nacional de Turismo ,or even by accessing the websites of the municipalities.

At the BdE, which has an English language version, you will find a list of online services to facilitate the whole process:

  • Registration of activity (“Registo de Atividade”);
  • Cessation of activity;
  • Changes in registration;
  • Declaration of Clean & Safe Establishment.

By clicking on Alojamento local – registo da atividade” , you’ll access a webpage on which you can perform the registry of your AL, starting by choosing its location by region and municipality on the map that appears. Then, the page will present information about:

  • The responsible entity in that location;
  • Issuance of license;
  • Necessary documentation;
  • Cost and validity;

From there, you can go through the procedure of registry in an entirely electronic way, with digital certification by, for example, the citizen card or a lawyer, solicitor or notary digital certificate, among other forms available. You’ll need the following documents:

  • Proof that you have an open activity with CAE 55201 or 55204;
    • Land register of the property;
    • Citizen’s card of the owner of the property.

The registry procedure gives each request the registration number of the AL establishment if the competent city council doesn’t object to it (within 10 days or, in the case of a hostel, 20 days). The registry number acts as the valid title. With it, you are allowed to begin your AL operation and advertise it, including on platforms like Airbnb and Booking, which require that number.

  • Step 5: Subscribe to compulsory civil liability insurance

The Portuguese law states that whoever operates a alojamento local unit is “jointly and severally liable with guests for damage caused by the latter to the building in which the unit is installed”. Thus, the person in charge of the establishment is obliged to take out an insurance policy that covers fire risks and property and non-property damage caused to guests and third parties.

The insurance must be contracted immediately and its non-existence may lead to the cancellation of the registration, meaning that your alojamento local license will be revoked.

Be prepared for the municipal council inspection

At the end of the 30-day period following the prior notice with a deadline to the municipAL council, there’s a mandatory inspection of the alojamento local to verify its compliance with all the requirements. The competent entity to do so is the municipal council. It is also responsible, together with the Autoridade de Segurança Alimentar e Económica (ASAE, meaning Food and Economic Security Authority) for supervising compliance with the entire legal regime. If requested by ASAE, Turismo de Portugal may also carry out inspections.

Here are the legal obligations that the alojamento local must provide its guests on every visit, whose compliance the inspection will verify:

  • Fire extinguisher;
  • Fire blanket;
  • First aid kit;
  • Visible explanation of the 112 emergency number;
  • Information on the availability of a complaint book (both in paper and digital format) must be provided whenever asked for by a user. This is an officially issued book, buyable online at Casa da Moeda website, that the AL holder must keep for a minimum 3 years period in an organized archive;
  • House instruction book in 4 languages (two of those being Portuguese and English), containing information about:
    • Collection and separation of waste procedures;
    • Instructions on how to operate household appliances;
    • Rules of no disturbance of the neighborhood and immediate neighbors;
    • Any condo information and rules on how the private space is to be used as well as how the common areas are to be used.
    • Telephone and email contacts of the person operating the AL or their agent.
  • Acrylic identification plate “AL” affixed (mandatory for all alojamento local categories except for residences).

If the inspection finds that any of these requirements are missing, the registration number may not be assigned.

General and security requirements of an alojamento local

AL establishments must comply with certain legal requirements:

  • Present conditions of conservation and operation of facilities and equipment;
  • Are connected to the public water supply and sewage system;
  • Have hot and cold running water;
  • Have a window or bALcony with direct communication to the exterior;
  • Be equipped with adequate furniture, equipment, and utensils;
  • Have a system to seal off the entrance of exterior light that ensures adequate ventilation and aeration conditions;
  • Have doors equipped with a security system that ensures the privacy of the users;
  • The sanitary facilities must have a security system that guarantees privacy;
  • Always meet hygiene and cleaning conditions.

AL establishments with a capacity of 10 people or less, must also meet safety requirements, but simpler ones:

  • Fire extinguisher and fire blanket accessible to users;
  • First-aid equipment accessible to users;
  • Indication of the national emergency number (112) in a place visible to users.

If the capacity exceeds 10 people, the alojamento local must comply with the rules against fire according to legislation: DL N.º 220/2008 and Portaria N.º 1532/2008.

Duties to perform as an operating alojamento local owner

  • Communicate the entry and exit of foreigners to SEF

The Portuguese Foreigners and Borders Service (Serviço de Estrangeiros e Fronteiras  – SEF) require that the responsible for AL national apartments and hotels communicate the data of all foreigners that use them – the person who makes the reservation and the other guests. The demanded data is:

  • Name;
  • ID card number;
  • NationALity;
  • City in which the guests were before arriving at this property;
  • City to which the guest is going.

This information must be provided within 3 working days of entering and leaving the accommodation and sent through the Accommodation Bulletin Information System. It can also be delivered in person at the locAL SEF services or, in locALities where they don’t exist, delivered to the National Republican Guard (GNR) or the Public Security Police (PSP).

It is mandatory that the accommodation establishment collects and communicates the data of all its guests and not only of the person who made the reservation.

  • Charge City Taxes

Some Portuguese municipALities have implemented the Municipal Tourist Tax (Taxa Municipal Turística) on overnight stays. It’s a fee charged to all guests staying in tourist or alojamento local developments in cities where the tax is in effect. Adding to the room rate, an extra amount is charged, per night and per person. The municipality is free to stipulate the amount to pay, who pays, who is exempt, and what is the limit on nights. Therefore, the unit value varies and can be consulted in the regulations of each municipality. 

For instance, in Lisbon, it’s mandatory to charge a nightly occupancy tax of €2 per person and stay, excluding children under 13, for a maximum of 7 nights.

What AL expenses are deductible?

If the property is only partially used as an AL, only 25% of the expenses will be considered as deductions. The deductible expenses include:

  • 4% of the property value of the property
  • Insurance
  • Electricity
  • Water
  • Gas
  • Cleaning
  • Commissions are paid to platforms such as Airbnb, Booking, or HomeAway.

As tax legislation is frequently subject to changes in Portugal, please do check all the updated relevant information at the time you decide to go forwards with your alojamento local business.

Budget the increased condo fees

An AL whose establishment is situated in a horizontal property like an apartment condominium may have to pay an increased condo fee. This is due to the fact that the alojamento local, with its guests, contributes to the wear and tear of the building in common areas. The condominium board may charge you an increase on your annual fees that ranges from 15% to a maximum of 30%. If you pay 100€ in condo fees, with an increase of 30% your new fee will be 130€. Don’t take the condominium support for granted. Take the necessary measures so that your guests don’t disturb the other condominium residents. If there are frequent disruptions to them the board can take a vote to close your alojamento local and send the decision to the mayor and the municipality, resulting in the shutdown of your listing for a year.

AL tax obligations

From the moment you start operating your alojamento local services, these are the tax obligations you’ll have to fulfill:

  • Issue invoice receipts (recibos verdes) through the AT Portal or pass invoices. If you choose invoices, you can use an AT-certified computer program or print the invoices in a certified letterpress.
  • Pay the value-added tax (IVA): if your annual income is beyond the amount of 10.000€, you are exempted from this obligation. Once this value is surpassed, you’re demanded to pay a 6% tax on the invoiced amounts. In this case, you must submit the correspondent tax return by means of a periodic quarterly declaration, easily accessible at the AT online portal.
  • Pay Personal Income Tax (Imposto para o Rendimento das Pessoas Singulares – IRS).

On short-term leases, 65% of income is considered an expense, resulting in taxation of only 35% of the invoiced amounts.    The IRS rate varies according to the monthly income and is tabulated by income ranks.

  • Delivery Model 30 regarding your income in the case of, for example, you have an advertisement of the property on an international site (like AirBnB) and pay commissions. In those cases, you also need to ask the company to send you the request for total or partial withholding of Portuguese tax under the double taxation agreement (model 21-RFI). If not, you’ll have to withhold 25% of the amount paid in commissions;

To be sure you have all the correct information for your specific situation and are compliant with all the legal obligations, we advise you to consult a specialized accountant. We at Pearls of Portugal can assist you in this demand by counseling you to our trusted, experienced professional partners.

Business case

You are interested in investing in real estate? You don’t know how to get an exact calculation of the costs and tax fees you will have to pay? Now, you can simulate your own business case with our specialised calculator.

Avoid fines

The fines for those who do not comply with the rules may vary depending on whether they are an individual or legal entity Not complying with the rules regarding the identification plate can lead to a fine between 50 and 750€ for an individual and between 250 and 7,500€ for a legal entity. Regarding safety requirements, a non-compliance results in a fine between 125 and 3.250€ (1.250-32.500€ for legal entities), but it can amount to a maximum ranging between 2.500 and 4.000€ for individuals, or 25.000 to 40.000 € for legal entities.

How to make your alojamento local visible and profitable

  • Create your alojamento local website

One good way to give you alojamento local visibility is to have your own alojamento local website. You can do it by yourself with a small investment in a WordPress pre-built theme, domain name purchases, and server hosting. An advantage of having your own website is that you can create a direct sales channel, that answers with no delay the client’s questions, especially in these times marked by the pandemic.  You can include a direct reservation option in it and settle your deals directly from your website. Still, it requires some time until you get the necessary visibility to attract your potential customers.

  • Advertise on alojamento local online platforms

An alternative way to get more immediate visibility and put your new business on the map, as well as gain reputation and trust with customers, is to advertise your alojamento local on the best available platforms. Booking, Airbnb, HomeAway, Rentalia, Trip Advisor, and Expedia are Among the most known advertising and reservation platforms. But not all might be the best fit for you. Our advice is that, firstly, you determine your business profile based on the type of accommodation you offer and the audience segment you want to target. Then you are prepared to decide which platform meets those needs to the best extent. Even then, to maximize your reach, diversification is key: consider advertising on at least 4 different platforms, including the ones with a broader reach, like Booking, and those which are more niche-segmented, such as Vrbo. But manage your reservations calendar with care or you might end up dealing with over-bookings (or same-day bookings done through different platforms). It’s wise to invest in a multi-channel manager.

Although in general, these platforms allow the creation of free ads and the payment directly through their websites or not, they do charge commissions. It’s a cost that has to be budgeted for in your business.

  • Invest in good quality photos

A detailed description of the property and its surrounding is very important to inform and attract clients, but having a gallery of good quality photos might take your AL a long way and set it apart from your competitors. Consider hiring a professional, specialized photographer to capture your alojamento local best features in the most appealing way. You could even add a professional video for a more immersive virtual experience.

As the leading real estate buyer’s agent, we at Pearls of Portugal grant you the best guide to alojamento local in Portugal. Our goal is to help you find the best possible solution to gain a sustainable return on your house purchase investment in this country. We work with professional partners to assist you all the way, so don’t hesitate in asking for our help. We’re at a phone call or email’s reach.

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