Alojamento Local (AL) License in Portugal : The Complete 2025 Guide

What is the Alojamento Local License ?

The Alojamento Local (AL) license is the official registration required to legally operate tourist accommodation in Portugal. It applies to all property owners—individuals or companies—who rent furnished properties on a short-term basis to visitors, typically for stays of less than 30 days. In other words, your apartment, house, or guest room must be registered as AL whenever you offer it as a seasonal rental for payment, provided it does not fall under the more complex categories of hotels or formal tourist establishments.

What is the purpose of the AL license ?

Its goal is to regulate the vacation rental sector (Airbnb, Booking, etc.) by ensuring compliance with safety, hygiene, and tax standards. Obtaining an AL registration number (issued by the local municipality through the national tourism registry) is mandatory to legally operate short-term rentals. This license also provides transparency for travelers—through the display of the registration number on listings—and enables authorities to verify that the property meets minimum requirements (equipment, safety, insurance, etc.). In short, any person—foreign investor, Portuguese homeowner, or real estate professional—wishing to rent a furnished property to tourists must hold an AL license.

Who is affected ?

The vast majority of temporary accommodations fall under this requirement: city apartments, villas and holiday homes, guesthouse rooms (B&B), and even hostels. There are several AL categories (apartment, standalone house, guest rooms, dormitory accommodation, etc.), each with its own specific requirements, which we detail later. Conversely, long-term rentals (standard leases over 30 days) or accommodations offered without financial compensation do not fall under the AL regime.

Note : Before starting any application, ensure that your property has a valid licença de utilização (usage license)—the urban compliance certificate issued by the municipality confirming that the property is approved for residential use. Without this document (for example, if a commercial space was converted into housing without authorization), it will be impossible to register for an AL license.

Legislative updates effective 1 January 2025

The legal framework for Alojamento Local has undergone significant changes following the housing crisis and a series of reforms. Since November 1, 2024 (with practical effects starting January 1, 2025), a new decree-law (n.º 76/2024) has come into force, deeply overhauling AL regulations. The stated goal is to strike a balance between the growth of tourism and the protection of the housing stock for residents.

Here are the key changes to be aware of in 2025 :

• Resumption of New AL Licenses (End of National Freeze) – The government has revoked the provision that suspended the issuance of new Alojamento Local licenses nationwide (a measure introduced in 2023 under the “Mais Habitação” program). In other words, as of early 2025, it is once again possible to apply for an AL license anywhere in Portugal, subject to the local restrictions outlined below. The previous rule requiring licenses to expire and be renewed every five years has also been abolished. AL licenses are now granted for an indefinite period (no more automatic expiry in 2030 as set out in the former law).

• Increased Powers for Municipalities – The management of AL authorizations is now decentralized. Each municipality may set its own rules through a municipal regulation. In particular, they may define “contention zones” (areas under heavy tourist pressure where new registrations are restricted) and “sustainable growth zones” (areas where new licenses remain possible but subject to certain conditions, e.g., energy requirements or primary residence quotas). In practice, this means that new AL license applications are once again accepted nationwide, except in zones that each municipality decides to block. Lisbon, for example, has immediately exercised this power (see city-by-city section). Municipalities may also appoint a “Provedor do Alojamento Local” (local accommodation ombudsman) responsible for resolving neighborhood disputes and promoting best practices in the sector.

• Easier License Transfer – The non-transferability rule (which meant that an AL license automatically expired if the property was sold or changed ownership) has been abolished nationwide. Now, if you sell your property or transfer it to a company, the new owner can retain the existing AL license without reapplying. This greatly reassures investors, as the value of an AL property is no longer threatened by automatic expiry upon sale. Exception: in contention zones defined by municipalities, there may be restrictions on transfers (e.g., some cities wish to prevent a property used as a long-term rental over the past two years from being converted into AL in a saturated area). However, these local restrictions exclude force majeure cases (inheritance, divorce, family transfer, etc.).

• Condominium Rules: Controlled Right to Object – Previously, condominium owners in a building had little ability to oppose an AL (except by unanimous assembly resolution). The new law clarifies that prior authorization from the condominium board is no longer required to register an AL within a co-owned property. However, the condominium retains the right to object after the fact if there are proven and repeated nuisances disturbing neighbors. In such a case, a vote representing more than 50% of ownership shares is required to request the cancellation of the license. The final decision lies with the municipality, which may suspend or revoke the license for up to five years in cases of abuse. Note: a condominium may still, upon creation or by amending its regulations, ban tourist rentals in the building altogether, but this requires a reinforced two-thirds vote and only applies to future AL registrations (existing licenses remain valid).

• Reduced Capacity Limits – A standard AL property remains limited to a maximum of nine bedrooms, but the total number of guests allowed has been reduced from 30 to 27 simultaneous occupants. This cap applies per housing unit. For example, a large five-bedroom villa may accommodate 10 people (5x2) plus possibly 2 on a sofa bed — a total of 12, well below the threshold of 27. In practice, few apartments exceed these limits, but this clarification mainly targets large hostels. The law also confirms the possibility of adding convertible extra beds (sofa beds, cribs, etc.) as long as they do not exceed 50% of the fixed-bed capacity. For instance, a studio AL designed for two people may host an additional child on a folding bed.

• Other Key Points – The grounds for license withdrawal have been expanded and clarified: lack of mandatory insurance, non-compliance with municipal regulations, repeated nuisances, etc., can lead the municipality to cancel an existing AL license. Furthermore, the registration process has changed: the comunicação prévia (online application) remains the standard route to obtain a license, but the period during which authorities may object or request an inspection has been extended from 10 days to 60 days (or 90 days in a contention zone). If there is no objection within this period, the license is deemed approved. Municipalities and ASAE (the Economic and Food Safety Authority) are now solely responsible for inspections, with Juntas de Freguesia (parish councils) no longer involved.

In summary – Since January 2025, regulations have been relaxed at the national level (resumption of new licenses, perpetual and transferable licenses, clearer condominium rules) while strengthening the ability of cities to impose local restrictions. It is therefore crucial to stay informed of the municipal rules in the city where your property is located (see city-by-city section below). Overall, these changes have been welcomed by tourism industry stakeholders, who feared a massive expiry of AL licenses in 2030. The Local Accommodation Association (ALEP) even stated that the sector “came close to losing a significant portion of its AL supply” in 2023 before the new government’s late-2024 reversal.

Requirements to Obtain or Maintain an AL License

Administrative Procedures and Registration –

To obtain the license, an online registration process is required. The owner (or their representative) must submit a “comunicação prévia” through the Balcão Único Eletrónico (ePortugal portal) or directly to the relevant municipality. This submission must include all details of the property (address, type, capacity, owner’s tax number, etc.) as well as a sworn declaration confirming that all legal criteria are met.

• Processing Time – Once the comunicação prévia is submitted, the AL license is generally issued immediately with a provisional number, allowing you to start operations. However, the municipality has 60 days (or 90 days in restricted zones) to verify the property’s compliance and potentially oppose or require corrections. After this period, if no notice is given, the license becomes definitively valid. During this time, the municipality may carry out an on-site inspection (checking safety equipment, habitability, etc.)—a step now more common in major cities.

  
  

• Fees – Applying for an AL license is free in most municipalities. However, some may charge a small administrative fee or file opening cost (varies). In addition, obtaining certain required technical certificates—such as an electrical or gas compliance certificate—may involve costs (inspection by a certified technician).

  
  

• Required Documents – Typically: a copy of the property title or lease contract (note: under Portuguese law, a tenant can only register an AL with the landlord’s written consent), the housing use permit (licença de utilização with uso habitacional), and proof of insurance. If the property is in a condominium, prior authorization from the owners’ assembly was previously mandatory, but is no longer explicitly required under national law (except for opening a hostel in a residential building, which still requires co-owners’ approval). That said, some cities or buildings may have internal rules, so it is wise to inform the condominium board to avoid later disputes.

  
  

• Tax Registration – In parallel, the owner must ensure tax compliance. A short-term rental business is considered a commercial activity (hospitality services) under Category B of IRS (professional income). If not already done, the start of activity must be declared to the Finanças (tax authority), choosing the tax regime (simplified or organized accounting—see Taxation section) and the activity code (usually CAE 55201). Failing to open this tax file may result in fines in the event of an audit.

Once the AL license is granted, a unique registration number (format: XXXXX/AL) is assigned. This number must appear in all advertisements and platforms where the property is listed, under penalty of a fine. In addition, an official “AL” plaque, compliant with Portaria 262/2020 (usually a 20 cm square with the AL logo), must be displayed at the entrance of the property—making the activity visible to both neighbors and authorities.

Safety and Habitability Standards

One of the main purposes of the AL license is to ensure that the accommodation offers a minimum level of comfort and safety for guests. Several technical requirements must be met before registration (and may be checked during a municipal inspection) :

• General Habitability – The property must meet basic standards for decent housing. It must be connected to potable water and sewage systems (or have a compliant autonomous system), provide a constant supply of hot and cold running water, have an electrical installation in compliance with current standards and adequate lighting, as well as a heating/air conditioning system suited to the local climate (heating in winter in the north, air conditioning or fans in the south, for example). All equipment and installations must be in good working order and properly maintained—a degraded or unsanitary property will not be accepted.

  
  

• Windows and Ventilation – Each room used for sleeping must have at least one window or French door that opens to the outside, providing sufficient natural ventilation and light. Windows must also be fitted with coverings (curtains or shutters) to block light and ensure guests’ privacy. In buildings without elevators, ensure exits present no hazards (e.g., secure window railings).

  
  

• Capacity and Furnishings – As noted earlier, an AL property is limited to 9 bedrooms and 27 guests. Each bedroom must measure at least 6.5 m² (single) or 9 m² (double), have the legal minimum ceiling height, and be fitted with a door and secure lock (to guarantee safety and privacy). The accommodation must have furniture and equipment suitable for the number of guests: sufficient standard-sized beds (approx. 90 × 190 cm for a single bed), bed linen and towels, storage space for personal belongings, tables and chairs, lighting, etc. In the case of an apartment or house, a basic equipped kitchen is required (stovetop, refrigerator, and minimum utensils to prepare a simple meal).

  
  

• Sanitary Facilities – There must be at least one full bathroom for every 4 bedrooms or 10 guests. Each bathroom (private or shared) must include at least a toilet, washbasin, and shower or bathtub in good working condition, with hot water available at all times. If shared among multiple guests, cleanliness must be ensured with very regular cleaning (hostels must provide daily cleaning of shared bathrooms). For dormitory-style accommodations (hostels), the law requires gender-separated facilities above a certain capacity, or alternatively individual lockable cubicles/toilets to guarantee privacy.

  
  

• Fire Safety and First Aid – Every AL property, even small ones, must have a fire extinguisher (size adapted to the property—generally 6 kg for an apartment) and a fire blanket near the kitchen. A smoke detector is not explicitly required by law, but is strongly recommended by the fire department (and by us!) for guest safety. A well-stocked first aid kit must be available, along with a visible display of the European emergency number (112) and local emergency contacts (hospital, police). For small units (under 10 guests), these items are sufficient. Larger units (≥10 guests, typically hostels or large villas) must comply with additional requirements: posted evacuation plans, emergency lighting, clearly marked emergency exits, and, where required, a fire alarm system and automatic smoke detectors in accordance with the Technical Fire Safety Regulations (Decreto-Lei No. 220/2008 and Portaria No. 1532/2008).

  
  

• Other Requirements – The property must have a secure locking system at the main entrance (solid entrance door with quality lock). Any gas installations (water heaters, cookers) must be compliant and maintained—an official gas compliance certificate may be required. The same applies to electricity in older properties—a compliance certificate from a licensed electrician may be requested to prove no major defects. Finally, cleanliness and hygiene are essential: between stays, the property must be fully cleaned and all bed linen/towels replaced. A cleaning log is not mandatory, but in practice, platforms and guests monitor this closely through reviews.
  
  

  Good to Know : To maximize safety, it is advisable to provide guests with a small welcome guide reminding them of key rules (e.g., no smoking, how to turn off the gas, evacuation plan). In addition, investing in a few smoke detectors (€15–20 each) and a gas detector if you have a gas installation can prevent accidents and demonstrate your professionalism—even if not explicitly required by law. Posting a simplified evacuation plan behind each bedroom door is another low-cost, professional measure that could save lives.

Insurance and Civil Liability

Since 2021—and now confirmed by the 2024 law—insurance is mandatory for all operators of local accommodation. This is a civil liability policy covering damages that may arise from the activity (e.g., injuries to a guest inside the property, fire damage to the building, theft, etc.). In practice, most insurers offer specific “non-occupying landlord – short-term rental” multi-risk policies. At a minimum, the policy must cover bodily injury and property damage suffered by guests or third parties as a result of the tourist operation. Failure to present valid insurance may lead to the municipality cancelling the licence during an inspection.

Other AL Owner Obligations: You must keep an official “Livro de Reclamações” (Complaints Book) available. This is a register—both in paper format and online via a dedicated portal—where guests can file an official complaint if needed. The book, available at stationery stores or online, is mandatory for all public accommodation establishments in Portugal. You must also display a visible sign informing guests of its availability (usually included in the complaints book kit).

Finally, the licence number must be displayed at the entrance of the property on the standardized “AL” plaque mentioned above. This plaque (generally acrylic, approx. 10 cm or 20 cm square) shows the registration number and type of accommodation. It costs around €20–30 and can be easily ordered online.

Taxation of AL Activity: VAT, Income Tax, and Fiscal Regime

Operating a local accommodation property in Portugal entails specific tax obligations, both regarding VAT and income tax.

VAT : Rates and Exemptions

Local Accommodation (AL) rentals in Portugal are subject to VAT, as they are considered a tourism accommodation service (similar to hotels). The applicable rate is the reduced 6% on the nightly rate (instead of the standard 23%), in accordance with Portuguese tax law on hospitality activities.

However, many small owners benefit from a VAT exemption: if your annual AL turnover does not exceed approximately €12,500 (Article 53 of the CIVA – “IVA Exoneração”), you may opt for the simplified regime. In this case, you do not charge VAT to your guests (0% VAT) and, in return, you cannot recover VAT on your expenses. This regime avoids the administrative burden of filing quarterly VAT returns.

• If exempt (turnover < ~€12,500): you charge €1,000/week, collect €1,000, and owe no VAT. All VAT paid on purchases (furniture, linen, repairs) remains at your expense.

• If subject to VAT (turnover > threshold): your prices must include 6% VAT. For a €1,000 weekly rate, you are effectively receiving €943.40 net + €56.60 VAT, which you remit to the tax authorities.

Example: If you buy equipment with 23% VAT (e.g., €20,000 in renovation work = €4,600 VAT), a VAT-registered operator can recover this VAT, offsetting the VAT collected on bookings.

• In the VAT regime, you must file quarterly (or monthly for high turnover) returns and remit the net VAT due. The benefit is that you can reclaim the 23% VAT on all professional expenses (furniture, renovations, management fees, platform commissions), which can outweigh the 6% VAT charged to guests once your business reaches a certain scale.

💡 Note : Tax rules may change and individual situations vary. Airnest REIM handles all these fiscal and administrative aspects with its partner accounting and tax advisory firm, ensuring compliance, tailored optimization, and complete peace of mind.

Income and Tax: Simplified Regime vs. Real Regime

Income generated from operating a Local Accommodation (AL) is taxable under IRS (personal income tax) or IRC (corporate income tax), depending on your ownership structure. Most private individuals choose the simplified regime under their own name (IRS Category B), as it offers advantageous flat-rate deductions and avoids the need for full bookkeeping.

Simplified Regime (individual in own name) – Under this regime, you are not taxed on actual profit, but on a fixed percentage of your gross revenue. For standard AL rentals (apartment or house), only 35% of gross income is considered taxable. In other words, 65% of revenue is automatically treated as expenses (maintenance, depreciation, fees, etc.) by the tax authorities, without needing to justify them. This percentage drops to 15% for guesthouses or hostels, as these are considered even more costly to operate. However, if the property is located in a designated containment zone (“zona de contenção urbana”), a 15% penalty applies. For example, an AL apartment in a high-pressure area (e.g., central Lisbon) will be taxed on 50% of revenue (35% + 15%).

However, if the property is located in a designated containment zone (“zona de contenção urbana”), a 15% penalty applies. For example, an AL apartment in a high-pressure area (e.g., central Lisbon) will be taxed on 50% of revenue (35% + 15%).

In short :

• Outside a containment zone → IRS applies to 35% of turnover.

• Inside a containment zone → IRS applies to 50% of turnover.

If annual income exceeds €27,360, an additional 15% penalty may apply unless you can provide proof of sufficient expenses. In practice, this is easily avoided by keeping invoices for utilities, cleaning, and other operating costs.

Profitability Example (excluding IRS, to illustrate main expenses) :

• If you are not VAT registered (small operator):

  For a booking of €1,000, the platform (e.g., Airbnb) typically charges around 15% commission (€150), leaving you with €850 net. No VAT is due to the State.

  
  

• If you are VAT registered, the calculation changes slightly but offers certain benefits. Let’s take a booking of €1,000 VAT included. This amount includes 6% VAT, meaning your revenue excluding VAT is €943.40, and you must remit €56.60 VAT to the State. The platform (e.g., Airbnb) charges 15% commission (€150) on the gross (VAT-inclusive) amount, which further reduces your effective revenue. After deducting Airbnb’s commission, you are left with €793.40 net, before other expenses (cleaning, utilities, etc.). The key advantage of being VAT registered is that you can reclaim the 23% VAT paid on all your business expenses (furniture, linens, services, renovations, etc.). This can represent a significant saving, especially for owners who have made major investments or manage multiple properties. However, you will be required to file periodic VAT returns (usually quarterly), which means a more structured accounting process.

  
  

• Income Tax (IRS) : Let’s assume the property is outside a containment zone. With a 0.35 coefficient, for €1,000 gross revenue, €350 would be subject to the IRS progressive tax rates (marginal rate depending on your other income). For example, if you are in the 28% bracket, this equals roughly €98 IRS.

  If the property were in a containment zone (0.50 coefficient), €500 would be taxable, resulting in approximately €140 IRS at a 28% rate.

  
  

• Other costs : Don’t forget recurring expenses such as utilities (water, electricity, internet), cleaning, and laundry, all of which are the owner’s responsibility and vary depending on the case.

  
  

In the simplified regime, the tax authorities assume a fixed expense rate and do not allow the deduction of actual expenses as they occur (except in the special case of the >€27k penalty mentioned earlier, where presenting invoices can avoid extra taxation). This regime remains advantageous as long as your real costs are below the flat-rate allowance (e.g., 65%). It is available as long as your total professional income does not exceed €200,000 over two years (otherwise, you must switch to the real regime).

Real Regime (Organized Accounting) – Under this system, you are taxed on the actual net profit of the activity, just like a small business. You must keep proper accounts with the help of a certified accountant (annual cost to be expected), record all income and expenses, and you will be taxed on the profit generated (after deducting actual expenses, depreciation, etc.). This regime can become advantageous if your actual expenses exceed the 65% flat-rate allowance of the simplified regime, or if you plan a large-scale operation (multiple properties, high turnover) requiring a corporate structure. In practice, many individual owners remain under the simplified regime for its ease of use, while companies (legal entities) are automatically under the real regime (IRC corporate tax at 21% on profits, after deducting all expenses and depreciation).

Other Local Taxes – Do not forget property tax (IMI): a property operating under AL remains subject to IMI like any other real estate asset. The rate varies depending on the municipality (0.3% to 0.45% of the cadastral value). A 2023 measure intended to abolish the age-based depreciation on IMI for AL properties (fixing the depreciation coefficient at 1, increasing annual IMI) was overturned in August 2024 after strong opposition from property owners. Therefore, in 2025, an AL property pays the standard IMI rate, with no specific surcharge.

Capital Gains on Sale – If you sell your property, be aware of the capital gains tax rules: a property owned in your personal name but allocated to AL is considered used for a professional activity. On sale, the gain is not eligible for the main residence exemptions. Depending on how long it has been used as AL, up to 95% of the gain may be taxable if you sell without having ceased AL activity at least three years before. It is therefore advisable, for an individual, to close the AL license and cease the activity at least three years before selling in order to benefit again from the more favorable capital gains regime for primary residences (only 50% of the gain taxable). This tax aspect is technical, so we recommend consulting a tax advisor to optimize a potential sale.

Profitability Example for a €1,000 Booking

Let’s take a concrete case of a one-week booking at €1,000, paid by a guest via a platform like Airbnb, to illustrate revenue distribution, fees, taxes, and the owner’s final income.

Platform Commission – Airbnb currently charges a 15% commission to the owner, which amounts to €150 in this example. The traveler, on their side, also pays service fees, but these do not pass through you.

→ Amount transferred by Airbnb: €850.

VAT :

• If you are not subject to VAT (exempt), there is no VAT to remit or recover: the €850 is gross income for you, but you cannot deduct VAT on your expenses.

• If you are subject to VAT (6%), the €1,000 rate is VAT-inclusive. You must therefore remit €56.60 in VAT collected from the guest. Your actual net-of-VAT revenue is €943.40, and since you received only €850 after Airbnb’s commission, your net revenue before VAT is €793.40.

💡 Note: Being VAT-registered allows you to recover VAT at 23% on all professional expenses (furnishings, concierge services, renovations, etc.). This makes the regime attractive if you have significant costs.

Net Income Before Tax :

Under the VAT exemption, you receive €850 (no possibility to recover VAT on your expenses).

Under the VAT regime, you receive €793.40 net of VAT, but with the possibility to recover VAT on your investments.

The VAT impact is therefore neutral in the short term but can improve profitability if you have significant expenses.

Income Tax :

Let’s assume this is an apartment outside a containment zone. With the 0.35 coefficient, on €1,000 of gross revenue, €350 would be subject to the IRS progressive rate (marginal rate depending on your other income). For reference, if you are in the 28% bracket, this equals roughly €98 in IRS.

If the property were in a containment zone (0.50 coefficient), €500 would be taxable, meaning about €140 at the same 28% rate.

Other operating costs: You would of course need to deduct the share of regular expenses attributable to that week’s rental — for example, the guests’ water/electricity consumption, and any local tourist taxes (see later) that must be remitted to the municipality. These costs vary greatly, but in high summer season, gross receipts generally far exceed costs, while in low season, lower occupancy must be offset.

Summary table for €1,000 gross revenue

Want to run your own simulations?

Airnest REIM provides exclusive profitability calculators, created with its accounting partners.

These allow you to compare tax regimes, estimate your net income based on your actual expenses, and forecast the impact of VAT.

Analysis by city and Regional areas

The AL market is heavily concentrated in the country’s main tourist areas, with local regulations varying widely. Here’s an overview of the major cities and regions in 2025 :

Lisbon

Lisbon is the city that has most heavily regulated the growth of tourist accommodation. By the end of 2023, there were around 19,000 registered AL properties, concentrated mainly in the historic center. Faced with the saturation of certain neighborhoods (in some areas, more than half of all housing units are AL properties!), Lisbon City Hall introduced “contention zones” as early as 2019, blocking new AL registrations in the most tourist-heavy districts (Baixa, Alfama, Bairro Alto, etc.). In 2022, these restriction areas were expanded to 14 freguesias (out of 24), covering practically the entire city center and inner belt.

With the new decree-law passed at the end of 2024, the municipality regained full regulatory control and immediately suspended the issuance of all new AL licenses citywide for one year (November 2024 to the end of May 2025, extendable). The purpose is to finalize a highly restrictive new municipal regulation. The 2025 draft regulation (under public consultation until April 2025) provides for :

• Absolute contention (no new ALs) in 8 central freguesias: Santa Maria Maior, Misericórdia, Santo António, São Vicente, Arroios, Estrela, Avenidas Novas, and Alcântara. Each exceeds the city’s critical 5% AL-to-resident housing ratio (e.g., Santa Maria Maior ≈ 69% tourist housing! Misericórdia 45%…).

• Relative contention (very limited quota) in 6 other freguesias: Belém, Campo de Ourique, Penha de França, Parque das Nações, Ajuda, and Campolide (ratios between 2.5% and 5%). In these areas, only a few exceptional new licenses could be granted if the ratio falls back below 2.5%.

• Micro-contention zones: the regulation introduces granularity down to the bairro (neighborhood) level. Some freguesias not classified as “red zones” still contain specific neighborhoods exceeding 5% AL density, which will be blocked. For example, in the mostly residential freguesia of Alvalade, the Entrecampos and Avenida Gago Coutinho neighborhoods exceed 5% and will be banned from new registrations. Similarly, pockets in Marvila and Beato are affected. In total, 15 additional neighborhoods outside the 8 “red” freguesias will face a complete ban, while about 10 other “orange” neighborhoods (2.5–5%) will have very restricted access.

In practice, Lisbon will close almost its entire central area to new ALs until further notice. The stated goal of the municipality is to bring the AL ratio below 5% across the board in the long term, encouraging the conversion of some AL units into long-term rentals. The city does not intend to evict current AL operators but is considering not renewing certain licenses in the most saturated areas (once expiration rules are possibly reinstated under the local regulation).

In the meantime, investing in a new AL property within Lisbon city limits in 2025 is extremely challenging — the only potential openings would be in peripheral, unsaturated neighborhoods (and even those are already awaiting new local regulations).

However, alternative solutions remain possible through Airnest REIM, subject to a thorough case-by-case assessment, such as structuring the activity under specific operational models, or focusing on mid-term rentals (30–90 days for foreign remote workers), which do not require an AL license. Another viable path could be traditional hospitality projects, although these require a different licensing framework — and paradoxically, the municipality has continued to issue permits for new hotels in the city center, a practice that remains controversial.

Despite this freeze, Lisbon remains highly profitable for existing AL licenses: nightly rates are among the highest in Europe, and occupancy often reaches 85% in summer. Investors who already own a “turnkey” AL in the center continue to generate strong returns — a key reason many oppose forced conversion. For newcomers, opportunities exist in Greater Lisbon municipalities such as Cascais, Oeiras, and Sintra, where tourism demand is strong but — for now — local restrictions remain lighter than in the capital.

Porto

Porto, the country’s second-largest metropolis, has also experienced a significant boom in AL properties in recent years (over 10,000 AL units in the metropolitan area). The Porto City Council introduced a “Regulation for the Sustainable Growth of AL” back in 2020, establishing restriction zones in the Historic Centre. In 2023, even before the national law changed, Porto had already suspended new AL licenses in its historic core and the Bonfim district (a highly touristic area) in response to the Mais Habitação program.

In December 2024, the Municipality of Porto approved a new AL regulation that lifts the general freeze but sets targeted suspension zones. According to official statements, the city’s 6 former central freguesias (Sé, Cedofeita, Santo Ildefonso, São Nicolau, Miragaia, Vitória)—covering areas such as Ribeira, Aliados, etc.—will remain under contention (no new AL allowed). The Bonfim district is also closed to new AL due to its high tourist density. Outside these hyper-central areas, Porto will allow new AL properties in other neighborhoods, while closely monitoring their development.

Notably, Porto is also using mandatory insurance as a regulatory tool: the mayor pointed out that around “20% of current licenses are ghost licenses” (properties no longer being rented or non-compliant) and that requiring proof of insurance should help clean up the registry. The new Porto regulation also introduces the concept of temporary licenses in certain areas: the municipality may grant temporary and revocable AL licenses depending on market conditions, rather than permanent ones.

For investors, Porto remains more accessible than Lisbon in 2025—new licenses can still be considered in areas such as Boavista, Campanhã, and Lordelo, which are not saturated. Returns are also strong (Porto ranked among the European cities with the highest average nightly rate in 2023). However, competition is rising, as many property owners are shifting their AL operations from Lisbon to Porto or other cities. Porto aims to strike a balance between preserving its UNESCO-listed Historic Centre from excessive tourist monoculture while benefiting from the tourism boom.

Faro & Algarve

The Algarve region, in southern Portugal, is a major tourist destination where AL plays a crucial role in the local economy. The city of Faro (the regional capital) itself is not the most touristic spot—serving more as an airport hub—and has not introduced any notable restrictions on AL as of 2025. Most AL properties in the Algarve are concentrated in the nearby resort towns: Albufeira, Loulé (Vilamoura), Portimão (Praia da Rocha), Lagos, Tavira, and others. To date, none of these coastal municipalities have implemented a general moratorium on new licenses—in fact, the Algarve has continued to see steady growth in AL. By the end of 2024, there were over 40,000 AL units in the Algarve region, representing nearly one-third of the national total.

That said, Algarve municipalities remain watchful. Some have begun to consider zoning measures should the situation deteriorate, particularly to protect local residents from the sharp rise in seasonal rents. According to local press, Loulé explored in 2023 the possibility of restricting AL in its historic center, while Lagos is closely monitoring the AL ratio in its old town. However, by late 2024, no concrete freeze had been enacted in the Algarve—except for Mafra (in the Lisbon region), which has capped AL in the highly touristic Ericeira area since 2018.

In 2025, the Algarve is therefore benefiting fully from the end of the national freeze: new AL applications are once again accepted everywhere, unless a future municipal decision dictates otherwise. Investors are advised to check with each local council, as specific regulations may emerge—for example, Vila Real de Santo António has announced its intention to prevent Monte Gordo (a seaside resort) from becoming entirely dominated by AL, and Portimão is considering quotas for Ferragudo and other areas. For now, however, the Algarve remains the most favorable region for AL, largely because the local economy relies heavily on tourism and the housing shortage for permanent residents is less pressing outside major towns.

Profitability outlook: The Algarve offers some of the best AL returns in the country. Towns like Albufeira or Portimão enjoy a long tourist season (April to October), with very high occupancy rates in summer (often above 90%) and nightly rates ranging from €100 to €200 for a family villa. However, operating costs such as pool and garden maintenance, as well as cleaning, must be factored in. Most municipalities have introduced a moderate tourist tax (e.g., €1.50 per night in Albufeira in 2025—see details below). One key point: the market is highly competitive, with an oversupply of similar apartments on Airbnb, meaning service quality and guest reviews are crucial differentiators.

Secondary Cities and Other Regions

Outside Lisbon, Porto, and the Algarve, two distinct trends are emerging: first, some medium-sized tourist cities are starting to implement preventive restrictions; second, certain areas that were previously underdeveloped for AL are becoming new hot spots for investment.

• In historic cities such as Sintra, Évora, and Coimbra, AL growth is being closely monitored. Sintra—a highly touristic site near Lisbon—froze new licenses in its historic center at the end of 2024, citing heritage preservation and the need to maintain housing for residents. Évora (in the Alentejo) currently has few formal restrictions but may take action if the ratio exceeds a certain threshold within its UNESCO-listed medieval walls. Coimbra, a university city, has focused more on regulating student rentals than tourist accommodations but is keeping an eye on developments.

• In the Porto metropolitan area, Vila Nova de Gaia (just across the river from Porto, known for its port wine cellars) suspended new licenses as of January 2024 in several districts, extending an existing moratorium. Gaia aims to control AL expansion while also promoting hotel development. Braga, a major northern city that has seen a tourism boom in recent years, announced in late 2024 that it is working on an AL regulation, potentially introducing quotas if the ratio exceeds 5%. Viana do Castelo (a coastal northern city) has, since 2023, banned all apartment ALs in its city center—only standalone houses can still be registered—specifically to protect the residential rental market.

• In the Lisbon region, Cascais, an upscale seaside resort, did not formally suspend AL by the end of 2024 (in an effort to maintain tourism investment) but is monitoring the situation closely. It did, however, increase its tourist tax from €2 to €3 per night in 2025 as a mild deterrent. Oeiras and Odivelas (Lisbon suburbs) are considering measures to regulate AL if necessary, especially Odivelas, which has started to see new listings emerge as a spillover effect from Lisbon’s restrictions. Mafra/Ericeira have had a local regime since 2018 limiting AL to a fixed percentage of the total housing stock, which remains in effect in 2025 (Ericeira being a major surf destination).

• Inland regions – The government actively encourages AL in rural and interior areas, supported by partial tax exemption programs. Smaller cities such as Tomar, Guimarães, and Aveiro are experiencing growing tourism and offering attractive returns, with no administrative restrictions for now. In fact, Aveiro publicly stated in 2024 that it has no plans to impose municipal limits on AL, preferring to let the market self-regulate and attract more visitors.

In summary, a clear map is taking shape: highly pressured urban centers (Lisbon, Porto, Sintra, Gaia, etc.) are tightening AL rules, coastal tourist zones (Algarve, Madeira, seaside towns) remain open but cautious, and the country’s interior is eager to attract tourist accommodations to boost the local economy. For a foreign investor in 2025, the most promising AL opportunities lie outside the hyper-centers: for example, targeting Lisbon’s outskirts (the Cascais coastal strip, the Sintra hills outside the historic core), Greater Porto beyond the UNESCO zone, or emerging destinations like the Douro wine region, Comporta (coastal), or Portugal’s central belt (the UNESCO triangle of Tomar–Batalha–Coimbra). These choices often yield higher net returns due to lower property acquisition costs, while still benefiting from rising tourist numbers.

Note : The 2025 AL zone map for Lisbon is available on the Lisbon City Council’s official website or in the March 2023 report. It clearly illustrates the north–south divide described above. The freguesias shown in red include all those listed earlier.

Post-License Obligations : Day-to-Day Operation

Obtaining the license is only the first step — an AL operator must then comply with several ongoing obligations throughout the activity.

• Declaration of Stays to SEF:

  This is an obligation often overlooked by new hosts. Every stay by foreign guests (non-Portuguese) must be registered with SEF (Serviço de Estrangeiros e Fronteiras) for immigration control purposes. Through the online platform Alojamento Local – SEF, the owner must declare the identity, length of stay, and origin of each foreign tourist hosted, within 3 days of arrival. This process is similar to the hotel police registration forms. In practice, once registered on the SEF portal, it takes about 2 minutes per guest. Failure to comply can result in heavy fines, as this is taken seriously for national security reasons.

  
  

• Tourist Tax:

  Most Portuguese cities have implemented a tourist tax (taxa turística) that hosts must collect from guests and remit to the municipality. The rules vary: for example, in Lisbon it is €2 per person per night (in 2025), capped at 7 nights, payable monthly to the City Council. Porto applies the same €2/night rate. Cascais has announced an increase from €2 to €3 per night in 2025. Smaller towns may have lower amounts (€1). As an AL owner, you must check with the municipality on the procedures for declaring and paying the tax — typically, you must register on the municipal tourist tax platform, then file monthly reports indicating the number of taxable nights and pay the due amount. Platforms like Airbnb sometimes automatically collect and remit these taxes on your behalf in certain cities (this has been the case in Lisbon since 2019), making the process easier — check Airbnb’s Help Center to confirm if automated collection applies in your location. Otherwise, you must either include it in your price or request it separately from guests. Failure to remit the tax can result in sanctions, as with any local tax.

  
  

• Invoicing and Accounting:

  Even under the simplified regime, you are required to issue receipts/invoices for every stay (typically one per booking). The simplest method is to use the official e-Fatura tax portal, where you can declare each rental (amount, dates, guest’s name) and the system generates a digital invoice linked to your NIF. Airbnb and similar platforms do not do this for you (they are only intermediaries). These records allow the tax authorities to track your income and allow you to record deductible business expenses on the same portal (if under the real regime, or to justify exceeding the €27,360 threshold). Make sure to keep all expense invoices related to your AL on the e-Fatura portal, categorizing them as business expenses — this is essential in case of an audit or to avoid the 15% penalty mentioned in the taxation section.

  
  

• Ongoing Maintenance and Safety Compliance:

  You must keep the property compliant at all times. This includes regular inspections — e.g., the fire extinguisher must be checked and recharged annually (keep the certificate), and the gas installation must be inspected periodically by a certified technician. You should also maintain an adequate stock of supplies (linen, etc.) to ensure smooth turnover between stays. Unannounced inspections by ASAE or the municipality may occur following a complaint; they will check for mandatory equipment (fire extinguisher, first aid kit, 112 emergency poster, complaints book, etc.) and the overall condition of the property. Serious non-compliance can result in suspension of the license until remedied.

  
  

• Neighborhood Relations:

  While less tangible legally, this is crucial for sustainable operation. The new law grants neighbors the right to take action in cases of repeated disturbances. It is therefore in your interest to build good relationships: inform neighbors of your activity, provide them with a 24/7 contact number in case of issues, set strict house rules on noise and shared spaces, and communicate them to guests (e.g., by posting them in the apartment). Many conflicts can be avoided through prevention. Some managers in Lisbon even distribute a “Good Neighbor Manual” in the building, explaining that guests will be required to behave appropriately, etc. Such initiatives can defuse hostility and prevent municipal complaints.

By complying with these obligations, you ensure the smooth running of your activity and harmonious relations with the neighborhood. Remember that an AL license is a revocable privilege — taking care of it daily (as much as you do your guests) is the key to a sustainable investment.

Risks and Penalties for Non-Compliance

Like any regulated activity, local accommodation (AL) carries risks if the rules are not followed. Below are the main scenarios to avoid, as they can lead to serious financial or legal consequences :

• Failure to Meet Safety Standards : If, during an inspection, mandatory equipment is missing (e.g., fire extinguisher) or the property presents a hazard (faulty electrical installation, no emergency exit in a large hostel, etc.), ASAE can order the suspension of operations until compliance is achieved and impose fines ranging from a few hundred euros to over €2,000 depending on the infraction. In the event of a serious incident (fire, guest injury) and the discovery of negligence, your civil and criminal liability may be engaged — hence the importance of having proper insurance and following all safety regulations.

• Noise and Neighborhood Disturbances : As mentioned earlier, the condominium can now vote to oppose your AL if your guests cause serious and repeated disturbances. Night parties, damage to property, and noisy comings and goings can result in complaints. If duly verified (for example, by the police) and approved at a condominium meeting, the municipality can suspend or revoke your license for up to 5 years. In practical terms, this could mean losing your right to operate as a short-term rental for several years, severely impacting profitability. To prevent this, set strict house rules (no parties, quiet hours after 10 p.m., etc.) and do not hesitate to refuse high-risk bookings (e.g., large groups of partygoers) — one fewer client is better than an angry neighbor and a potential ban.

• Tax Fraud : The Portuguese tax authorities are increasingly cross-checking data (Airbnb provides the authorities with income summaries for hosts). If you underreport or fail to declare your income, you risk a tax reassessment. The AT (Autoridade Tributária) can demand the unpaid taxes plus late interest (4% per year) and fines ranging from 30% to 100% of the evaded tax. In addition, failure to issue invoices (mandatory) can be fined €150 per missing invoice. In cases of large-scale proven fraud, criminal charges are possible, though for most small owners the risk is primarily financial. The best protection is transparency: declare all income, keep proof of expenses, and you will have no problems.

• License Revocation by the Municipality : Beyond nuisance issues, the municipality can revoke your AL license if the basic conditions are no longer met — for example, if you no longer have valid insurance or if the property is no longer compliant (e.g., unauthorized modifications). Likewise, if you obtained the license when the area was under a moratorium through some loophole, expect it to be invalidated sooner or later. If the license is withdrawn, the law even allows the municipality to prohibit any new AL registration for the same property for 5 years (to prevent a third party from reapplying immediately). In short, treat your license as a valuable asset and always remain compliant.

• Special Cases : If your property is located in a classified historical monument or subject to a special status (e.g., subsidized housing), specific rules may prohibit AL. For example, in certain municipal housing programs, Airbnb-type rentals are contractually banned under penalty of fines. Always verify if your property is subject to any special restrictions.

Conclusion, Operating an Alojamento Local in 2025 remains an excellent investment opportunity in Portugal, provided you comply with all legal and tax requirements and adapt your strategy to each city’s local regulations. The country has found a new balanced framework that curbs abuses in high-pressure areas while continuing to support tourism and investment profitability in most regions. By staying informed , relying on local experts (accountants, lawyers, management companies), and keeping an eye on legal developments, foreign investors, Portuguese owners, and real estate professionals can all make the most of the AL license in Portugal in 2025 and beyond.

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