Short-Term vs. Mid-Term Rentals in Portugal : Key Differences for Property Owners

In Portugal’s evolving rental market, property owners and investors often weigh the benefits of short-term rentals (STR) — typically operated under an Alojamento Local (AL) licence — against mid-term rentals (MTR), which cater to stays of one to three months and often target a different audience. Understanding the legal, fiscal, and operational distinctions between these two models is essential to maximise profitability while remaining compliant.

-> Short-term rental profitability calculator
-> Mid-term rental profitability calculator

Licensing & Legal Framework

• Short-Term Rentals (STR):

  
  

  • Require an Alojamento Local licence issued by the municipality.

  • Subject to local zoning rules — in cities like Lisbon and Porto, Housing Pressure Zones can limit or suspend new licences entirely.

  • Must comply with safety, insurance, and equipment standards (fire extinguisher, first-aid kit, 112 emergency signage, SEF registration for foreign guests, etc.).

  
  

• Mid-Term Rentals (MTR):

  
  

  • No AL licence required if the rental term is 30 days or more.

  • Governed by the standard Portuguese Civil Code and rental regulations, with simplified compliance requirements.

  • Attractive in areas where AL is restricted or saturated.

  
  

Target Audience & Demand Profile

• STR: Tourists, weekend travellers, holidaymakers — high seasonality, with occupancy peaking in summer or during events.

• MTR: Digital nomads, expatriates relocating, corporate clients on assignment — more stable demand year-round, especially in Lisbon, Porto, and near business hubs.

Revenue Potential

• STR:

  
  

  • Highest nightly rates (Portugal ranks among Europe’s top markets in certain districts).

  • Potential occupancy of 80–90% in peak season, but lower in off-peak months.

  • Strong upside in tourist-heavy destinations like the Algarve, Madeira, and historic city centres (if licensed).

  
  

• MTR:

  
  

  • Lower rates per night, but longer, guaranteed stays mean reduced vacancy risk.

  • Income can be more predictable, especially in cities with high corporate or student demand.

  
  

Fiscal & VAT Considerations

• STR (AL Licence):

  
  

  • Taxed under the IRS Category B regime for individuals (simplified or real regime).

  • VAT at 6% applies if registered, with the possibility of reclaiming 23% VAT on eligible expenses.

  • Obligations include monthly or quarterly VAT declarations and e-Fatura invoice issuance.

  
  

• MTR:

  
  

  • Generally treated as long-term rental for tax purposes (Category F), with no VAT applicable.

  • Fewer administrative obligations, though contracts must be registered with the Tax Authority.

  
  

Operational Differences

• STR:

  
  

  • Higher turnover of guests, requiring frequent cleaning, check-ins/outs, linen service, and guest support.

  • Higher wear and tear due to intensive use.

  
  

• MTR:

  
  

  • Lower operational intensity — fewer check-ins and cleanings per year.

  • Tenants often handle minor day-to-day upkeep.

  
  

Strategic Use of Both Models

Some properties — especially multi-unit or premium-located — can combine both approaches seasonally:

• STR in high-demand months for peak income.

• Switch to MTR in low season to ensure stable occupancy and cash flow.

How Airnest REIM Maximises Both Models

At Airnest REIM, we manage short-, mid-, and long-term rentals end-to-end:

• Legal compliance (licensing, SEF declarations, municipal taxes).

• Full fiscal and accounting management (IRS, VAT, regime optimisation).

• Professional guest handling, maintenance, and cleaning operations.

• Market-driven pricing strategies to optimise both occupancy and revenue.

• Feasibility analysis to choose the best model for your property and location — including hybrid approaches.

Result: Owners achieve maximum profitability without the operational or compliance burden — while remaining fully protected from regulatory risks.

Conclusion

Choosing between short- and mid-term rentals in Portugal is not just a matter of preference — it’s a strategic decision driven by location, legal constraints, target market, and operational capacity. With the right partner, you can harness the strengths of both models and adapt dynamically to market changes.

💡 Airnest REIM can help you identify the most profitable and compliant rental strategy for your property — even in highly regulated areas.