Tax on Alojamento Local in Portugal: Decoding the New Extraordinary Contribution (CEAL)

In the context of the government's policy aimed at ensuring more housing, a set of measures known as the "Pacote Mais Habitações" was adopted in October 2023.

One of the pillars of this policy is to restrict the operation of properties holding the "Alojamento Local" license and encourage their conversion into traditional residential rentals.

To achieve this goal, taxation is employed in two ways:

• As a deterrent: a new extraordinary contribution has been created for properties operated as Alojamento Local.

• As an incentive: a tax exemption has been established for rental income from properties with an Alojamento Local license converted into traditional rentals.

Here, I present the extraordinary contribution. To learn more about the tax exemption, I invite you to read the dedicated article.

Summary: The extraordinary contribution (CEAL) primarily concerns operators of apartments and lodging establishments operated as Alojamento Local on December 31 of a calendar year. They must submit the declaration before June 20 and pay the contribution before June 25.

In this article, I provide a comprehensive overview of this extraordinary contribution:

1. Individuals Involved: Owner or Operator?

2. Tax on Alojamento Local: Which Properties Are Affected?

3. CEAL Amount: How Is It Calculated?

4. Declaration and Payment: How to Submit and When to Pay CEAL?

5. Conclusion

1. Individuals Involved: Owner or Operator?

Those in charge of operating Alojamento Local establishments are liable for CEAL.

However, owners who are not operators are subsidiarily responsible for CEAL payment.

In summary:

• If the owner operates the property: they are subject to CEAL.

• If the owner is not the operator: the operator is subject to CEAL. However, if the operator does not pay, the owner may be called upon to pay.

2. Tax on Alojamento Local: Which Properties Are Affected?

CEAL applies to residential buildings designated as Alojamento Local on December 31 of each calendar year.

Properties with a valid Alojamento Local license are considered designated for Alojamento Local.

However, exclusions and exemptions exist. For example, if your primary residence is operated as Alojamento Local for less than 120 days per year, you are exempt from CEAL.

3. CEAL Amount: How Is It Calculated?

CEAL is a 15% tax applied to the taxable base.

The taxable base is calculated by applying the economic coefficient of Alojamento Local and the urban pressure coefficient to the gross private area of ​​the taxable properties.

Note: CEAL does not depend on the actual income generated by the operation of Alojamento Local.

Details: The coefficients are supposed to be published annually by the government.

• The urban pressure coefficient has been published. The complete list of urban pressure coefficients for 2023 is available here. For example, for CEAL 2023, this coefficient is:

  • 1 for the union of Freguesias of Cascais and Estoril

  • 0.7105 for the Freguesia of Estrela

  • 0.4907 for the union of Frequsias of Charneca de Caparica e Sobreda .

• The economic coefficient of Alojamento Local corresponds to an estimate of the average income of Alojamento Local per square meter. It is calculated based on data to be communicated by the National Institute of Statistics. For CEAL 2023, the 2019 data will be considered. This coefficient has not yet been published, but the Alojamento Local em Portugal association estimates that for the calculation of CEAL 2023, this coefficient would be €209.88 per m2/year.

4. Declaration and Payment: How to Submit and When to Pay CEAL?

• The declaration, to be submitted electronically to the Tax Authority, must be made by the liable parties before June 20.

• Payment must be made before June 25.
  

For example, the operator of a property as Alojamento Local on December 31, 2023, must submit the declaration before June 20, 2024, and pay CEAL before June 25, 2024.

Conclusion

The implementation of this exceptional contribution, combined with other legal and fiscal measures, aims to encourage the transition from Alojamento Local operations to traditional residential rentals.

A tax incentive to support this transition has been created in the form of a tax exemption for rental income. To learn more about this topic, I invite you to subscribe and be notified when the article on this subject is published.

To learn more about legal and fiscal matters related to real estate, I invite you to read other articles available on the blog.

If you need specific advice, I invite you to book a consultation by clicking on this link or by sending me an email (mm@acassociados.com).

Mounia