Short-term rental taxes in Portugal: income tax and VAT

This is where omissions cost the most, and where the mistake only surfaces a year later. This guide sets out the general framework; it does not replace a certified accountant, and there is one point — VAT — on which the doctrine itself is not settled.

How is the income taxed?

Under category B, business income, with an activity opened at the Portal das Finanças under the furnished tourist accommodation code. Operating a short-term rental is a business activity, not a lease.

Under the simplified regime you do not deduct costs: a coefficient is applied to gross takings, and the result is the taxable income.

The simplified regime applies up to €200,000 of annual turnover. Above that, organised accounting becomes mandatory.

The higher coefficient changes the Lisbon case

This is the tax consequence of containment zones, and it almost never appears in a buyer's arithmetic.

A property in Alfama and Graça or Baixa and Chiado sits in a containment parish: tax falls on half the takings, not on 35%. On €30,000 of annual takings, the taxable base moves from €10,500 to €15,000.

The same property in Barreiro or Moita keeps the 0.35 coefficient. The gap is not marginal and it repeats every year. See Containment zones.

When is there VAT to charge?

Most owners charge none, because they fall under the article 53 exemption of the VAT code: it covers anyone who did not exceed, in the previous calendar year, a turnover of €15,000 — a threshold updated by Decree-Law 35/2025.

Once past the threshold you move to the normal regime and start charging VAT. And here it is worth being precise about what is settled and what is argued:

• What is agreed: ancillary services do not follow the accommodation regime. Cleaning fees, laundry, minibar or transfers are separate supplies and do not take the rate applicable to accommodation. The tax authority cross-checks this automatically through SAF-T and the wording of the invoice line.
• What is not agreed: the rate applicable to the accommodation service itself. One reading places it under heading 2.17 of List I of the VAT code, at the reduced rate, by assimilation to a hotel-type establishment. Another holds that a short-term rental, governed by Decree-Law 128/2014, is not a hotel establishment within the meaning of Decree-Law 80/2017, and applies the standard rate.

Do not settle this by copying what a neighbour does. If you cross the threshold, have the position confirmed by a certified accountant before issuing your first VAT invoice — a wrong rate, repeated for a year, is corrected with interest.

What counts as income

Everything the guest pays for the stay, including the cleaning fee. The mistake is common, because platforms show that fee on a separate line and it looks like a reimbursed expense. It is not: it is business income.

What does not count as your income is the municipal tourist tax collected on the council's behalf, which is remitted to them and is outside the scope of VAT. See Tourist tax and What cleaning fee to charge.

Before buying, do the whole calculation

The net return on a short-term rental depends on three variables that rarely appear on the same sheet: the nightly rate, the operating cost of each turnover, and the tax coefficient of the area.

Our calculator handles the second — monthly management cost by property type and number of turnovers, with public pricing. Add the other two before completion, not after.