As more and more tourists are visiting the Algarve annually it is worth considering renting your property as a way of reducing the annual costs of owning a holiday home.

If you are considering renting, then there are a number of issues that you need to be aware of in order to avoid any problems with the Portuguese licensing and tax departments.

Rental licenses (Licença de alojamento local)

The Decreto-Lei n.º39/2008 of 7 March and Portaria 517/2008 25 June states that properties which are rented out, but not licensed as a touristic development, require a Rental Licence. This license is available from the local council (Câmara) which has a number of requirements that need to be complied with but none of which are unduly onerous. The reasoning behind the licencing is to ensure the quality of accommodation for visitors to Portugal meets proper and acceptable safety and hygiene standards. The law has been enforced quite vigorously to date with ASEA (the overseeing body) carrying out spot-checks on rental agents to ensure that all properties that they have available for rent are properly licensed. With so many properties advertised on the Internet for holiday rental it is also an easy task for ASEA to review holiday rental sites to determine properties that are being rented that may not be registered with them.

How to obtain a rental license

These are issued, as stated previously, by the local Câmara and we would advise that you instruct your lawyer or property manager to arrange obtaining the proper licence for you. You will need to provide the following papers:

  • Copy title deeds
  • Copy electricity, gas, etc. certificates
  • Copy plans of the property
  • Health and Safety plan for the property
  • Floor plans of the property
  • Caderneta predial
  • Certidão predial
  • Ownership details

You will also need to ensure that the property is equipped with the following:

  • Fire safety equipment (extinguishers and fire blanket in kitchen)
  • Emergency signs
  • Connected to all mains utilities or with their own provision in place
  • Hot and cold water
  • Proper ventilation system (air vents)
  • Properly furnished to a reasonable standard
  • Proper exterior locks and on bathroom doors
  • Adequate changes of linen
  • Programme of cleaning
  • Complaints book
  • First aid facilities (emergency numbers prominently displayed)
  • Book detailing rules and regulations of use of the property
  • Instruction manuals for appliances
  • Proper safety measures around swimming pool


Taxation issues

If the property is located in Portugal then Portuguese tax has to be paid on any income generated by the property. This applies even if the owner and the renter are based outside Portugal and if the rental is arranged without the assistance of a Portuguese-based agent.

The property owner is legally obliged to file an income tax return declaring the rental achieved during the year. Many expenses can be deducted from the gross income to arrive at the net taxable figure and these include:

  • Annual rates
  • Property management & cleaning expenses
  • Works & improvements on the property
  • Condominium charges