Portugal is a beautiful Western European country that offers residents and visitors stunning beaches along the Atlantic Ocean, historic architecture in its vibrant cities, and picturesque landscapes. Plus, the country’s thriving real estate market attracts investors from across the globe with the potential to secure a strong return on investment.
Over the past few years, Portugal has become a popular destination for expats looking to purchase property and relocate to the country’s sunny shores, as well as international investors interested in investing in vacation homes to rent out during their absence or as an investment property.
If you are an investor considering renting out your Portuguese property in the short term, you will need to obtain an Alojamento Local license—or AL license for short. In this Alojamento Local Private Accommodation guide, we discuss what an AL License is, the latest changes to securing one, and essential practical information prospective investors should be aware of.
Alojamento Local Portugal: What is an Alojamento Local license?
Alojamento Local, or Alojamentos Locais in Portuguese, refers to self-catering, temporary vacation rental properties listed on platforms like Airbnb and Booking.com.
These properties are a popular option for travelers seeking short-term stays and have become a significant part of Portugal’s tourism industry. To legally operate an Alojamento Local, property owners must obtain an Alojamento Local (AL) License, which is issued by the local council or town hall (Câmara Municipal). This license is mandatory for renting properties short-term, whether as guesthouses or vacation rentals.
Obtaining an AL License was initially straightforward. However, in 2023, the More Housing (Mais Habitação) Package, introduced under Law No. 56/2023, imposed stricter regulations, making it more challenging for Portuguese property investors to benefit from the thriving tourism sector.
These changes aimed to address housing shortages but also added hurdles for those in the rental market. However, on 1 November 2024, many of these restrictive measures were revoked, easing the process for potential AL operators. We explore how these changes affect buying property in Portugal as an investment in more detail in the section below.
The Latest Alojamento Local Updates 2024
As stated above, restrictions imposed by the Mais Habitação package on AL licenses were reversed in November 2024, and now all decision-making power has been returned to the municipalities in which each local private accommodation rental is located.
Even in the most desirable locations in Portugal, municipalities have the authority to approve administrative regulations regarding AL activities in their territory. Municipal regulations include the municipality’s ability to suspend authorizing new registrations in designated areas for a maximum period of one year.
In addition to these changes and in order to respond to problems and complaints associated with the AL, the following restrictions brought about in 2023 were also revoked:
- Suspending the issuance of new registrations of AL establishments
- Expiry of inactive registrations when there was no proof of the maintenance of the activity
- Non-transferability of licenses
- The requirement to review all existing records on the date of publication of the Mais Habitação program in 2030
- The rule that AL registrations were valid for renewable five-year periods
There have also been additional Alojamento Local (AL) regulations implemented with the vision to enhance oversight and balance community interests. A key change is the granting of condominium assemblies the power to oppose an AL operation within their building by submitting a reasoned resolution to the municipal president.
This resolution must be approved by over half of the co-ownership shares, citing disruptions to normal building use or disturbances to residents’ peace. In response, the municipal president may cancel the registration or, alternatively, mediate with the help of the Ombudsman to reach a mutually agreeable solution.
Municipalities now also have expanded authority to designate containment areas, where an overload of AL establishments warrants restrictions, and sustainable growth areas, which require special monitoring to prevent overdevelopment. These areas are based on specific studies, reassessed every three years, and can limit new registrations or license transfers for properties classified as “villas” or “apartments.”
Further changes include allowing commercial establishments in pre-1951 buildings, subject to compliance with legal requirements, and shifting the oversight of AL operations to municipalities and the Food and Economic Safety Authority (ASAE), removing parish councils from this role.
Exploring the Types of Alojamento Local in Portugal
Portugal is home to a diverse range of Alojamento Local (AL) options catering to various preferences, from private escapes to shared spaces. AL establishments are categorized based on the type of accommodation provided, offering flexibility to guests.
Residences are independent buildings designed for single-family use, perfect for travelers seeking privacy. Apartments are self-contained units within urban buildings, ideal for independent stays. However, hosts must ensure compliance with condominium rules and city hall regulations before renting.
Hostels, often located in vibrant areas, can host up to 9 rooms or 30 guests. They offer shared bathrooms and common areas to foster a communal experience. Rooms within private properties, limited to three per establishment, are a cozy option for a more personal touch.
Guests are typically required to provide instructions, such as their expected arrival time during check-in, and can communicate additional needs through a special requests box. In most cases, guests prepare their own meals in a shared or private kitchen and use other common or public areas when available.
Hosts may offer extra amenities upon request, and it’s essential to confirm these details beforehand. Contacting the property directly with paid reservation details, such as through a bank transfer, helps streamline the check-in process.
Whether you’re looking for a single bed in a shared space or a private apartment, AL properties in Portugal cater to diverse needs. For a smooth stay, both guests and hosts must adhere to instructions and local regulations.
What are the capacity limits of an Alojamento Local?
Recent changes have also been made to Alojamento Local (AL) capacity limits. Limits are now set at a maximum of 9 rooms and 27 users, except for “rooms” and “hostel” types, which were previously capped at 30 users.
Establishments exceeding this must use convertible or supplementary beds, ensuring the total does not exceed 50 percent of fixed beds available in the accommodation. This adjustment was set to regulate occupancy and maintain compliance with updated guidelines.
What price should you charge for your AL?
This will mainly depend on the type of local private accommodation you are running, where it is located, and the amenities offered by the accommodation.
Once you have your AL up and running, it is a good idea to regularly review competitor room deals for comparable properties and consult experts to adjust your pricing strategy to ensure that your pricing is aligned with market trends and customer expectations.
Set competitive rates, considering factors like location and season. Remember to clearly indicate the average nightly price for your AL in all your communication.
Starting an Alojamento Local in Portugal
Starting an Alojamento Local private accommodation involves careful planning and attention to various key aspects. Setting prices requires well-thought-out pricing strategies and seasonal rates to remain competitive.
Proper payment and confirmation systems ensure a smooth booking process for guests. Adhering to safety regulations and compliance is crucial, as is understanding tax obligations and VAT requirements.
Hosts must also effectively maintain cleaning, linens, and property management to maintain high standards. Additionally, navigating legal considerations and zone restrictions is vital to ensuring the business operates within local laws.
Thorough preparation in these areas will set a solid foundation for success, and below, we explore more of the aspects to consider before you begin the journey.
Start by confirming containment and sustainable growth areas
Important factors to bear in mind are the containment and sustainable growth areas put in place to regulate Alojamento Local private accommodation.
The new decree-law states that municipalities will be able to approve containment areas and sustainable growth areas, by parish or union of parishes, in part or as a whole, where it will not be possible to secure a new AL, to preserve the social reality of certain neighborhoods and locations.
Areas of containment
Containment areas are defined as areas where the number of accommodation establishments exceeds the number needed to justify restrictions on the installation of new establishments.
Areas of sustainable growth
Sustainable growth areas are defined as areas where special monitoring and oversight measures are warranted to prevent overpopulation of certain natural areas.
How to register your Alojamento Local
To register your Alojamento Local (AL) for short-term rentals in Portugal, follow the steps outlined below to ensure that you comply with legal requirements and offer your guests a smooth rental experience.
This process applies to various property types, including houses and apartments. All steps are mandatory if you plan on offering temporary accommodation at a set price. The registration process is free of charge, and no renewal is necessary unless there are changes to your listing or registration details.
If you manage multiple listings, this process must be completed for each individual property:
- Open an activity: Access the Portuguese Tax and Customs Authority (Finanças) portal and register a new activity under CAE codes 55201 or 55204
- Register your AL number: Visit the RNAL website to register your property. You will need documents such as the land register, your Citizen Card, and proof of activity registration with the Tax and Customs Authority.
- Meet inspection requirements: Within 30 days of registration, the local Municipal Council will inspect your property. Ensure your property is equipped with a fire extinguisher, fire blanket, first aid kit, house instruction booklet in four languages, and an acrylic identification plate marked “AL.” A complaints book must also be made available
- Invoicing and reporting:
- Issue invoicing receipts for all bookings through the Portuguese Tax and Customs Authority (Finanças) portal. Send receipts to guests within five days.
- Submit mandatory guest information to AIMA, including their name, ID card number, nationality, and travel details
- Tourist taxes: Collect applicable tourist taxes and remit them to your local City Council
Required documents for Alojamento Local registration
In order to be compliant with Portuguese regulations, you need to provide the following documents to authorities:
- The name, address, and NIF (Portuguese tax number) of the owner or person who will carry out the activity
- The activity start date
- The property capacity (the number of beds, rooms, and guests)
- A valid authorization of the use of the property
- Emergency contact details
- Your residency’s name and address
- Your passport, ID, and company documents
- The land registry document
- A signed declaration that states that your Portugal real estate investment is a suitable AL establishment
- Lease agreement, deeds, or other documents that entitle you to rent your property
- Declaration of Tax Activity (Declaração de Início de Atividade) CAE 55201 or 552014
What AL expenses are deductible?
According to PWC Portugal, deductible expenses include all costs effectively incurred and paid by taxpayers to obtain or secure rental income, excluding financial costs, depreciation, furniture, household appliances, decorations, and comfort accessories.
Additionally, repair and maintenance expenses incurred within 24 months before the start of the lease are deductible, provided the property was not used for purposes other than rental during that time.
AL tax obligations in Portugal
You will be required to pay income tax on your short-term rental income in Portugal and navigate through specific tax regimes and obligations. There are two regimes or categories your income tax will fall under, and these are their tax implications for your short-term rental Portugal activity:
- Simplified tax regime: Earnings from local accommodation less than €200,000 per year can opt for the simplified regime. Here, only 35 percent of your taxable profit is subject to tax based on hotel services and similar activities.
- Organized accounts tax regime: The organized accounts regime applies for earnings exceeding €200,000 annually. In this case, Corporation Tax (IRC) rules will determine your taxable profits. Here, a fixed rate of 21 percent applies to all profits earned.
Additionally, local accommodation services are subject to a Value Added Tax (VAT) rate of 6 percent, which covers accommodation and breakfast costs. You can claim a VAT exemption if you’re on the simplified regime and your annual income is below €10,000. Your tax returns should be submitted through the Portal das Finanças.
How to Make Your Alojamento Local Visible and Profitable
In this digital world, there are a number of ways to make your Alojamento Local private accommodation or shared accommodation spaces visible and profitable. We explore a few of these possibilities in the sections below.
Create your Alojamento Local website
Creating your Alojamento Local website is an excellent way to make your private or shared accommodation visible and profitable. Be sure to highlight availability for adults and children while emphasizing features, perhaps a fully equipped kitchen featuring a fridge and a microwave and staff support.
Depending on where your accommodation is located, make sure to list local attractions. For instance, if your AL is in Lisbon, focus on Lisbon attractions and landmarks, , and include a note encouraging guests to visit them.
You can also use your website to specify that bookings are strictly for only guests and should be made in advance to ensure smooth transmission of details. Your site can also feature pricing information, like cost per night so that you can manage expectations and bookings. You can also allow guests to check in or check out online.
Advertise on Alojamento Local online platforms
Advertising your Alojamento Local on online platforms like Airbnb and Booking.com is a proven way to make your private or shared accommodation visible and profitable. These platforms connect you with travelers seeking unique stays, providing excellent exposure for your listing.
Highlight key features of your space, whether private or shared, to attract the right audience. These websites have a vast user base and search tools, so you can showcase your accommodation to potential guests worldwide. A clear, appealing profile will ensure that your listing stands out, helping you increase bookings and maximize the profitability of your Alojamento Local.
Invest in good quality photos
Also, bear in mind that high-quality images showcase the unique features of your private or shared accommodation spaces, helping potential guests visualize their stay. Clear, well-lit photos create a strong first impression, setting your listing apart from the competition. This investment increases the likelihood of bookings and builds trust, making your Alojamento Local a preferred choice for travelers.
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Frequently Asked Questions about the Alojamento Local (AL) License in Portugal
What is Alojamento Local?
Alojamento Local (AL), or Alojamentos Locais in Portuguese, refers to self-catering, short-term vacation rentals commonly listed on platforms like Airbnb and Booking.com. These rentals are popular among travelers in Portugal, and property owners must obtain an AL License from the local council to legally operate them as guesthouses or vacation properties.
Where can I find Alojamento Local in Portugal?
You will be able to find Alojamento Local private accommodation options all across Portugal, whether you are looking for a cosmopolitan city experience in Lisbon or Porto or an exciting coastal getaway in the Algarve region or on the Silver Coast.
How do I apply for an AL license in Portugal?
To apply for an AL license in Portugal, submit the required documentation to the Câmara Municipal or local municipality of your accommodation. Ensure that gas and electric installations meet the necessary standards. It’s recommended to work with an experienced professional to assist with the process and ensure compliance.
Where is AL most profitable in Portugal?
AL accommodations are most profitable in highly sought-after regions of Portugal, including Lisbon, Cascais, the Algarve, and the Silver Coast. However, regulations on containment and sustainable growth areas must be considered. Containment areas have too many accommodations, while sustainable growth areas require oversight to maintain balance and prevent overdevelopment.
For how long can I rent an AL property?
You can rent your Alojamento Local private accommodation indefinitely on a short-term basis. No license renewal is necessary unless your listing or registration details change.
Is the AL sign compulsory in all ALs?
According to the Law (62/2018), the AL sign is mandatory in all Alojamento Local private accommodation properties.
When I buy a property with an existing AL license, do I get to keep it?
Yes, new laws implemented in August 2024 approved the transfer of Alojamento Local licenses between owners.
Are information about the Alojamento local public?
Yes, Turismo de Portugal provides public information about active AL licenses on the RNAL website.
What are the different types of AL properties?
Alojamento Local (AL) properties in Portugal vary widely. They include independent residences for privacy, self-contained apartments within urban buildings, and hostels with shared spaces for a communal experience. Additionally, private rooms, limited to three per establishment, offer a more intimate stay, and each type is subject to local regulations and rules.
What are the requirements to register an AL?
In order to be compliant with Portuguese regulations, you need to provide the following documents to authorities:
- The name, address, and NIF (Portuguese tax number) of the owner or person who will carry out the activity
- The activity start date
- The property capacity (the number of beds, rooms, and guests)
- A valid authorization of the use of the property
- Emergency contact details
- Your residency’s name and address
- Your passport, ID, and company documents
- The land registry document
- A signed declaration that states that your real estate is a suitable AL establishment
- Lease agreement, deeds, or other documents that entitle you to rent your property
- Declaration of Tax Activity (Declaração de Início de Atividade) CAE 55201 or 552014
How do I get an AL License?
To obtain an AL license in Portugal, submit the required documentation to the Câmara Municipal or local municipality of your accommodation. Ensure gas and electric installations meet necessary standards. It’s advisable to collaborate with an experienced professional to guide you through the process and ensure full compliance with regulations.
What are the tax obligations for AL owners?
AL (local accommodation) owners in Portugal must pay income tax on their short-term rental income and comply with specific tax regimes. For earnings below €200,000 annually, owners can opt for the simplified tax regime, which taxes 35 percent of taxable profit. For earnings above €200,000, the organized accounts tax regime applies, and Corporation Tax (IRC) rules dictate taxable profits with a 21 percent rate.
Additionally, a 6 percent Value Added Tax (VAT) applies to accommodation and breakfast services, with an exemption available if annual income is under €10,000. Tax returns must be submitted through the Portal das Finanças.
How should I price my AL property?
This will mainly depend on the type of local private accommodation you are running, where it is located, and the amenities offered by the accommodation. Once you have your AL up and running, it is a good idea to regularly review competitor room deals for comparable properties and consult experts to adjust your pricing strategy to ensure that your pricing is aligned with market trends and customer expectations.
How can I maximize bookings for AL?
To maximize bookings for your Alojamento Local (AL), start by creating a dedicated website that highlights key features, such as availability, a fully equipped kitchen, and local attractions. If your AL is in Lisbon, for example, focus on nearby landmarks and work with local real estate professionals who can help you market the property.
Ensure your website includes booking details, such as pricing and advance reservation requirements, and allows guests to check in or out online. Additionally, advertise on popular platforms like Airbnb and Booking.com to increase visibility. Lastly, invest in high-quality photos to showcase your space, creating a strong first impression and boosting guest confidence.
