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Owners who remove their properties from Local Lodging and make them available for long-term letting can be spared mandatory CGT assessment. This push to long-term letting integrates the government’s package of proposals in the 2018 State Budget. Once confirmed, this measure will be the only Capital Gains Tax refuge once an owner stops an “AL” activity.
Local Lodging accommodated one third of visitors to Portugal in 2017, an annualised increase of almost 29%, according to ALEP (Association of Local Lodging in Portugal). As of July 2018, there are currently more than 72,000 Local Lodging establishments registered nationwide.
France is the EU country with the highest number of tourist beds available. According to 2016 data collected by the European Statistical Office, the French tourist industry registered 5.1 million beds or 16.4% of the EU total. Italy ranked a close second with 4.9 million beds (15.8%). Spain placed third with 3.5 million beds or 11.2%. Over the same period, Portugal recorded approximately 567,800 tourist accommodations, an increase of 16,100 beds (+3%) when compared to the previous year.
A study carried out by the movement “Oporto is not for sale” reveals that, among the 6,198 Local Lodging registrations in Portugal’s second largest city, 51.3% are enrolled by companies. The leading company holds 70 properties while there are 84 “AL” enterprises exceeding the legal limit of 7 registrations.
Thus far this summer, ASAE has carried out 610 raids on Tourist Enterprises and Local Lodging establishments throughout Portugal. The operation led to the suspension of three “AL” operations for non-compliance with hygiene requirements. The investigating teams instituted 111 administrative actions and a criminal proceeding, primarily for infractions regarding non-registration of a tourist activity.
Local Lodging is not the only type of tourist facility to grow in 2017. Hotels, aparthotels and rural hotels as well as tourist villages, apartments and inns also displayed dynamic results with more new units opening and record occupancy rates last year. In the case of “AL”, the majority of the increase is due to registrations of pre-existing units.
Recent legislative reforms have created tighter rules for operators of Local Lodging establishments. Under the new regulations, Councils will have a say in setting occupancy quotas within their municipalities. Condominiums can launch complaints regarding “AL” based disturbances and misuse in their buildings. (more…)
The Government recommends that hostels no longer be classified as Local Lodging (“AL”). The new legislation proposes that this type of offering be registered in the category of “Tourist Development” (“empreendimento turístico”), requiring a more formal licensing process. When the 2008 legislative reform originally introduced this accommodation concept, hostels fell into the loosely defined “Local Lodging” catchall category, rather than within the more tightly regulated “Tourist Development” grouping.
Diverse and sometimes contradictory recommendations are currently under discussion to modify underlying rules governing Local Lodging. In last year’s budget, numerous changes came into effect regarding the taxation of Local Lodging income. In IRC, “AL” income under the Corporate Simplified Regime lost its reduced 0.04 coefficient, rising to 0.35. In IRS, the changes moved in the same direction: under the Simplified Regime for Independent workers, the 0.35 coefficient also applies. Apartments and villas let under in Local Lodging registrations were excluded from the 0.15 coefficient still available to room lets, hostels and holiday offerings registered under the “Tourist Development” classification.