If you want to make a profit from a property and rent it for short periods, then this guide is for you. From legislation to taxes, we will explain you everything about Local Accommodation.
Read the Local Accommodation guide that we prepared for you and don’t get lost. Follow us step by step.
Step 1: opening activity with the Tax Office
Step 2: don’t forget Social Security contributions
Step 3: registration on Balcão Único Eletrónico
Please note that you will need the following documents for the registration:
– Copy of the identification document of the person exploiting the property
– Copy of the property tax document
– Statement of responsibility signed by the person exploiting the property guaranteeing that the property can be used for the provision of accommodation services
Once you have the registration number, you can receive guest and put your ads on booking platforms (where you have to associate your registration number to your ad). However, please note that after you open the activity with the Tax Office and give prior notice, the City Hall has 30 days to carry out an initial inspection of the property and confirm the information on the registration, but you don’t have to wait to open your house to the public. There may be other inspections afterwards, requested by the municipality or ASAE to Turismo de Portugal.
Step 4: safety requirements
Step 5: other requirements to remember
– Have all installations and equipment in a good conservation and operation condition
– Have cold and warm running water
– Have windows to the outside
– Have proper furniture, equipment, and utensils
– Gather hygiene and cleaning conditions
Step 6: reporting to SEF
Step 7: issuing invoices
Step 8: taxes payable
As an owner of a property for local accommodation, you will have to declare on your Tax Return the amounts that you received and for which you issued a receipt. We recommend that you use the calculator and do some calculations before you make any decision that could influence taxes that apply to your income from your local accommodation.
Firstly, you can opt for the simplified regime (for income up to 200 thousand euros per year) or organized accounting (for income over 200 thousand euros per year). If you opt for the simplified regime, your revenue concerning local accommodation will be taxed in 35%, and the Tax Authority will assume that the other 65% were expenses with your local accommodation activity.
If you opt for organized accounting, you will have to calculate all expenses that concern your local accommodation (which must be properly documented) and subtract such amount from the total profit you had with this activity. The resulting amount will be taxed. If you opt for organized accounting, you must hire a chartered accountant.
There is also a recent option, created with the State Budget for 2017, which states that income from local accommodation can be taxed under the rules of Category F (rental income). With this option, you can deduct expenses (condominium, construction works, municipal property tax, and water, electricity and telecom bills), and you will be taxed in 28% of your revenue (after the expenses were deducted). Alternatively, you can aggregate your local accommodation income if your tax rate is below 28%. Please note that this must be done every year.
As to VAT, you can be exempt until 10 thousand euros of annual revenue, when you are under the simplified regime. Above this amount, you will pay 6% VAT (5% in Madeira and 4% in Azores). You should do some calculations to see what’s the best option for you. If you have to pay VAT you can also deduct the tax that you pay concerning your expenses with local accommodation, for example, 23% of expenses with furniture, household items, detergents, etc. That is, you pay 6% but you deduct 23%.
