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The Left Block, a partner in the governing coalition, proposes changes to current Local Lodging legislation. Under the soon-to-be recommended plan, holiday letting not exceeding 90 days per year should continue to benefit from the current tax regime. Year-round operation – without a limit of days and designated as “tourist accommodation” (Habitação turística) – must be equated with a hotel activity and assessed on the same basis.
As an accommodation service business, Local Lodging is subject to VAT at the reduced rate of 6% (5% in Madeira and the Azores). Value Added Tax is applied to the price of lodging when annual income surpasses €10,000 and is reported quarterly to the Portuguese Tax Authority. In contrast, income from long-term lets (<30 days) is exempt from VAT.
The penalty for letting furnished accommodations to tourists without a license (registration with your local Council) is as follows: for Individuals: €2,500 to €3,740.98 / for Companies: €25,000 to €44,891.22 The same fines also apply to the absence of an Energy Efficiency Certificate that is mandatory when conducting property related activities.
Foreign property Investments double 2013 levels
In the first 6 months, real estate investments by international groups and individuals have reached 400 million Euros. This should bring property purchases close to pre-crisis levels by the end of the year. Currently, this investing is predominantly in commercial property in upscale sections of Lisbon.
In a single day in August, the GNR received 8 complaints regarding potential local lodging irregularities. The accusations arose from people who had paid while making reservations who later found that either the accommodation did not exist or was already rented.