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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.
Property owners who rent out an empty property, can continue to charge rent without VAT, unless the property is prepared for a commercial activity or if they offer additional services to the tenant, such as management, gardening or maintenance.