Many foreigners purchase a property as an investment to create passive income. If you choose to rent your property in Portugal, you may wish to rent it as long-term rental (minimum of one year) or short-term rental (holiday rental). While you don’t need to have a license for renting your property on long-term lease, you will need one for your short-term rental.
License For Short-term Rental
In order to be able to market and rent your property on the short-term rental portals such as Airbnb and booking.com, you must receive a license. Based on a regulation established in 2014, you must have a license for AL which, stands for Alojamento Local (Local Lodging). This license is issued by the Municipal Council (Câmara Municipal) of the city in which the property is located. In order to achieve this license, you must take a few simple steps. Assuming that you already have a NIF and are using the portal of the tax authorities (https://www.portaldasfinancas.gov.pt/) you will have to create a new tax activity code which allows you to be able to practice as a short-term renter. The activity codes are formatted as CAE followed by a 5-digit number. This is quite a simple step and you should be able to do it in minutes, but if you are not comfortable with the portal, you can ask any accountant to help you with this job, and No, they should not ask for a high fee. It really takes only a couple of minutes to do. You must also have an insurance policy required for this activity called the seguro de responsabilidade civil (Insurance for Civil Responsibility) that would cover you for a minimum liability of 150,000 Euros. Most insurance companies offer this Policy and the annual fees are anywhere between 95.00 - 250.00 Euros.
Next you will have to register the property. You can do this online or in person. For online registration you can visit the Public Services website (https://eportugal.gov.pt/) which also gives you the choice of changing the language to English. You can search for Alojamento Local which will bring you to the relevant page.
This page will allow you to submit the necessary documents. This is the list of the required documents:
Personal data of the person who is carrying out this activity: Full name, permanent address, and NIF (Portuguese tax number), National Identification number, and your contact email and phone number. In case the owner/renter is a company, submit the relevant information from the company.
Confirmation of the creation of the new tax-activity (Tax portal)
Property Documents: Land Registration of the Property, Utilization License
Proof that you are authorised to utilise the property for the purpose of AL (Proof of ownership, rental contract, or permit to use)
Name of the Rental Property as it will be promoted and under which name bookings will be made.
Rental capacity (how many persons can the property accommodate?)
The start date
In most cases an inspection of the property will be made by your Municipal Council within a month from your registration. However, in some cases they will not make the inspection. In both cases you are expected to maintain certain conditions at the property. These include having the identification plaque (AL) outside of your property, providing a handbook, a complaints book, as well as ensuring that there is a functioning fire extinguisher, a first aide box, and light blocking curtains or blinds.
Running an AL comes with a few further obligations. You are required by the Foreigners and Borders Service (SEF) to submit some basic information about your clients, including name, nationality, national ID card number, and travel dates. You will also pay the tourist taxes to your municipal council. In addition, you must issue special invoices to your clients for receipt of every income that is made from AL. These invoices can be issued on your tax portal. If you are not familiar with the portal, your accountant can issue these invoices for you.