In recent years, with the boom in tourism in Portugal, opening a short-term rental has become a highly profitable business and, consequently, a popular choice among the Portuguese. After all, there are many stories of people who have become wealthy simply by renting their homes to foreigners. But is it really that simple?
Yes and no. While opening a short-term rental can offer significant potential, its success depends on several factors, much like any other business. No property thrives without considerable effort and dedication. Many business owners mistakenly believe it’s as simple as furnishing a house or apartment and listing it on the market.
In fact, there are many bureaucratic and fiscal requirements. Not to mention all the logistics and, of course, digital marketing issues. But let's go step by step. Do you want to open a local accommodation? Then here's how to proceed.
What is a Short-Term Rental?
Before getting started, it’s important to understand what we’re talking about. So, what exactly is a short-term rental? According to the official definition under Portuguese law, it is an establishment that provides temporary accommodation services, primarily to tourists, but not exclusively, in exchange for payment. However, it must not meet the criteria of a traditional tourist establishment, such as a hotel, guesthouse, or inn.
How to Register a Short-Term Rental?
In order to streamline the bureaucratic process, the government created the Balcão Único Electrónico, where entrepreneurs can start their various businesses. The registration of short-term rentals is also done here, subject to prior notification. This process takes between 10 and 20 days, and once completed, you will be assigned a registration number, which will serve as the valid title for your establishment to open to the public.
When making the request on the Balcão Único Electrónico, you must attach the property’s use authorization, the identification of the entity responsible for operating the short-term rental (whether individual or corporate), the address of the property, the commercial name adopted by the establishment, the number of beds, rooms, and the guest capacity, as well as the contact details. You must also include a copy of the identification card or the permanent certificate of commercial registration, a liability statement, the property’s land registry, the lease agreement if you are not the owner, the tax activity commencement declaration from the tax office, and, if your short-term rental is located in a building, the condominium meeting minutes that approved its installation.
What do I Need to Open the Door to the Public?
After completing this bureaucratic procedure, there are just a few more steps to open your short-term rental to the public. First of all, you must register with the tax authorities (Finanças) if you haven't done so already. The income generated from short-term rentals is taxed under category B (business and professional income) or category F (property income). It is advisable to hire an accountant to ensure your annual accounts are properly managed, even if you are operating as an individual.
Next, your short-term rental must meet certain legal requirements. To begin with, it must have water, electricity, and be connected to the public sewage system, as is obvious. It should also be properly furnished and equipped, and meet all hygiene and cleanliness standards. For this, it is recommended to hire a cleaning company that can regularly visit the property to ensure these procedures are followed for the comfort of your guests.
It must also comply with all safety requirements according to current law. For this, you need to have a fire extinguisher, a fire blanket, a first-aid kit, and a clearly visible emergency phone number for all guests. It is best to consult the relevant legislation before inviting inspections. Finally, but no less important, don’t forget to display information in several languages, provide a guestbook for complaints, and take out a liability insurance policy.
Which Taxes Do I Need to Pay?
Operating a short-term rental involves specific tax obligations and more. You must have an invoicing system in place to issue receipts for all expenses incurred. For this, you will once again need the assistance of a certified accountant.
Annually, you are required to pay VAT, although you will be exempt from this tax if your income in the previous fiscal year did not exceed 13,500 euros. If your short-term rental is listed on international online platforms like Airbnb or Booking, you must also submit the Model 30 form, which reports income paid to non-residents, by the second month after payment is made to these platforms.
If you have any doubts, it’s important to seek specialized assistance. Accountants are the professionals qualified to provide guidance in this area. The financial side is crucial in any business, and short-term rentals are no exception. Always ensure you meet your obligations, as failing to do so can lead to significant consequences.
