Attentive to Local Lodging activities, the tax man is tightening its grip on owners who fail to report and pay their taxes. Online platforms may soon be required to share information on customers, according to the Jornal de Notícias. The aim of the Portuguese Revenue is to avoid fraud and tax evasion. To this end, the ministry is studying ways to force the holiday letting reservation platforms to report “AL” operator data to Finanças.
The new regulatory restrictions implemented since October of last year have failed to slow demand for central Lisbon properties. While new Local Lodging applications dropped by 60%, foreign investors continue to seek out and buy property in historical districts as real estate sales soared by 38% over the period. While the “AL” sector is still significant, there are clearly other factors driving the market as well.
The Vila Nova de Gaia Municipal Council has passed regulations to limit Local Lodging establishments and prevent the dislocation of long-term residents from historic neighbourhoods. The city centre and the entrance to the bridge D. Luís I are two of the target areas for the new restrictions. These measures follow on the heels of similar actions taken in Lisbon and other municipalities around the country.
In the past six months, almost 2,000 “AL” enrolments have been wound up. Many owners have stopped letting but failed to cancel their registrations due to capital gains tax liabilities. In the first quarter of 2019, new “AL” sign-ups fell nationally by 40% and by 60% in Lisbon. These numbers are likely to be understated. In total, the capital currently counts with 18,000 Local Lodging Establishments. Nationwide, there are approximately 83,000. 2020 could prove to be a year of mass exodus.