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AL Business owners may now find higher water bills in their mail boxes. Once local councils find out that a property is engaged in local lodging, they can reclassify the business, instead of “domestic” or “comercial” as “diversos”. In this case, the water costs more than for a private residential property. One consideration which may justify the increase is the fact that AL creates more rubbish and waste water, and as a result, the City Hall has to increase these basic services.
The State Budget has been passed and there are no major changes to the AL system: no limitations in number of days per year, and no tax increases are coming our way. The exception hits the entrepreneur who earns more than 27.300€ per year with Local Lodging (or as a Sole Trader in other areas); these businesses will have to prove 15% of their costs by presenting the respective invoices to arrive at the 65% exemption.
Tax receipts from Local Lodging (“AL”) grew from €69,000,000 to €123,000,000 between 2015 and 2017, as revealed by the Secretary of State for Tourism, Ana Mendes Godinho. “AL” license registrations also increased almost twofold from 28,000 to over 50,000 over the same period.
In the first month of data-crossing via digital platforms, ASAE (Autoridade de Segurança Alimenta e Económica) examined 142 “AL” operators. Inspectors instituted 30 misconduct proceedings and suspended the activity of one establishment. Since July 2017, legislation requires Local Lodging operators to display their registration numbers in online advertising, facing fines of up to €32,500 for non-compliance.
Some local lodging operators have been detected listing fraudulent registration numbers over the internet. Since 01 July, online platforms are required to display this code when promoting an “AL” property. The absence of a license draws fines of €3,740.98 for individuals and €35,000 for companies. Fraud is punishable by imprisonment.
ASAE inspectors are now searching ads of existing listings on online platforms such as Booking.com, Airbnb or Home Away to verify their Local Lodging registrations. As of 01 July, those advertising holiday lets on online platforms are required to display their “AL” registration licence number. It is currently estimated that approximately 20% of offerings are illegal. Failure to comply can lead to heavy fines for internet platforms and unlisted local lodging operators.
Beginning 01 July 2017, any website advertising local accommodations in Portugal must display the corresponding AL registration number. Failure to do so will lead to fines from a minimum of €125 to maximum of €32,500 as mandated in Decree-law nº80/2017.
According to the Hotel Association of Portugal, in November of last year, 25 operators had multiple “AL” registrations: between 51 and 300. Of these, seven were running more than a hundred properties as “Local Lodging establishments,” up to a maximum of three hundred. While the majority of owners let just one or two properties, current “AL” legislation fails to distinguish between those operating on a peer-to-peer basis and those running full-blown “horizontal” hotels.
In almost two-thirds of cases, Local Lodging (“Alojamento Local”) is the main economic activity for Lisbon homeowners who choose to let holiday accommodations to tourists. This is one of the conclusions of the study on “AL” offerings in the Portuguese capital that was developed by the Higher Institute of Labour and Business Sciences (ISCTE). According to the same study, almost 86% of “AL” offerings are in apartments.
On the weekend, a notice appeared in the national media that the Government may plan to increase the taxation on the AL sector in the 2017 budget.
This information is probably a test balloon to gauge public opinion on this matter.
There has already been strong opposition by some industry members, and NALLE will be voicing its opposition any such move with the Authorities.
For the moment, any news in this regard should be taken with calm. Nothing is eaten as hot as it is cooked!