Quick response: Local Accommodation (Alojamento Local) income is, as a rule, taxed under Category B of the IRS (Personal Income Tax), applying a coefficient of 0.35 under the simplified regime for lodging establishments (0.50 for properties located in containment zones). The activity is subject to VAT (IVA) at the reduced rate of 6% on the mainland and requires registration in the RNAL (National Register of Local Accommodation), reporting guests to SEF/AIMA (Immigration and Border Services / Agency for Integration, Migration and Asylum), and meeting safety requirements.
Local Accommodation has long ceased to be an informal side income. It is an economic activity with its own tax, labour, and regulatory obligations.
In summary
- Mandatory registration in the National Register of Local Accommodation (RNAL - Registo Nacional de Alojamento Local), via the Entrepreneur's Desk (Balcão do Empreendedor).
- IRS taxation: Category B (as a rule) or option for Category F in specific cases.
- Coefficient under the simplified regime: 0.35 for lodging establishments, increased to 0.50 in containment zones.
- VAT (IVA): reduced rate of 6% on the mainland, with the possibility of falling under the Article 53 exemption regime if below the threshold.
- Social Security (Segurança Social): contributions as a self-employed individual, with specific rules for relevant income.
- Guest reporting is mandatory, under penalty of a fine.
Category B or Category F: the decision with the greatest impact
By default, operating a Local Accommodation business is considered a commercial activity, taxed under Category B.
However, there is the option to choose taxation under Category F rules (rental income) when the owner holds the property title and the operation is limited to certain modalities, such as a villa or apartment.
| Criterion | Category B (simplified regime) | Category F |
|---|---|---|
| Taxable base | 35% of gross income (or 50% in a containment zone) | Net income after actual expenses |
| Expenses | Not individually deductible | Incurred and documented expenses are deductible |
| Tax rate | Aggregated with other income, progressive rates | Autonomous tax rate of 25% or option for aggregation |
| Social Security | Contributions due | Does not generate contributions |
| VAT | Subject | Subject |
When is Category F worthwhile? Typically when the property incurs high costs for maintenance, service charges (condomínio), Municipal Property Tax (IMI), and mortgage interest, and when the owner already has income that places them in a high IRS tax bracket.
When is Category B worthwhile? When the 0.35 coefficient generates a lower taxable base than would result from deducting actual expenses, which occurs in most cases where properties are paid off and operational costs are low.
Containment zones and the higher coefficient
In areas classified as containment zones, defined by municipal resolution, the applicable coefficient under the simplified regime rises from 0.35 to 0.50.
In practice, this means that the same income generates a taxable base approximately 43% higher. In Lisbon and Porto, where a large portion of central parishes is covered, this is a decisive factor in net profitability.
Before purchasing a property for Local Accommodation, check the parish classification. It is a five-minute check that can change the viability of the investment.
VAT on Local Accommodation
The provision of accommodation services is subject to VAT at the reduced rate of 6% on the mainland (with specific rates in the Autonomous Regions).
Pay attention to ancillary services: meals, drinks, transfers, and extra cleaning invoiced separately may be subject to different rates.
Those below the turnover threshold can qualify for the Article 53 exemption regime, charging no VAT but also being unable to deduct it. For those who carried out significant renovations or fully furnished the property from scratch, waiving the exemption may be worthwhile due to deducting the input VAT incurred.
A frequently overlooked point: when the accommodation is marketed through international platforms, the commission charged by the platform generally constitutes an intra-Community acquisition of services, generating reverse-charge VAT obligations and the need for VIES registration.
Non-tax obligations that attract fines
Many Local Accommodation operators scrupulously fulfill their tax obligations but fail on regulatory requirements.
- Registration in RNAL and display of the registration number.
- Reporting foreign guests to the competent authorities within the statutory deadline.
- Complaints book (Livro de Reclamações), in physical and electronic format.
- Safety requirements: fire extinguisher, fire blanket, first-aid kit, and emergency information.
- Valid public liability insurance.
- Identification plaque on the exterior of the establishment.
- Condominium approval, in situations provided by law for autonomous units.
How to declare income
Local Accommodation income under Category B is declared in Anexo B (simplified regime) or Anexo C (organised accounting) of the Modelo 3 tax return.
If opting for Category F, it is declared in Anexo F.
Income obtained through platforms is additionally subject to automatic reporting rules by digital platform operators. In other words: the Tax Authority (Autoridade Tributária) receives the data directly from the platform. The room for omissions has vanished.
Frequently asked questions
Do I need to register an activity with the tax office (Finanças) to operate a Local Accommodation?
Yes. Operating a Local Accommodation requires submitting a declaration of commencement of activity and choosing the appropriate tax status.
What is the applicable coefficient under the simplified regime?
0.35 for lodging establishments, increased to 0.50 when the property is located in a containment zone.
Do I have to charge VAT?
The activity is subject to VAT at the reduced rate of 6% on the mainland, unless you fall under the Article 53 exemption regime.
Do I pay Social Security?
Yes, as a self-employed individual if taxed under Category B. If opting for Category F, the income does not generate contributions.
Does the platform report my income to the Tax Authority?
Yes. Digital platform operators are required to report information about host sellers and the income earned.
Do you operate or plan to operate a Local Accommodation?
The choice between Category B and Category F, the VAT status, and the property ownership structure are decisions made once that have an impact for years. At Grupo Your, we simulate these scenarios using your figures. Get in touch with us.
Related articles:
- How to Declare Income from Airbnb, Uber, Bolt and Glovo on Your 2026 IRS Return
- VAT on Property Rental: When Does the Exemption Apply?
- Sole Traders and Landlords: Find Out What You Can Deduct in Your IRS Tax Return
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