How income from an alojamento local is taxed in Portugal in 2026

Under the simplified IRS regime, only part of the revenue from an alojamento local (AL) counts as taxable income: 35% for an apartment or house, or 50% if the property is in a containment area. That amount is added to your other income and taxed at the normal progressive rates. Two other things sit beside IRS: the tourist tax that guests pay in Porto, and VAT, which depends on how the AL is run.

The IRS coefficients

Article 31 of the IRS Code (CIRS) sets the coefficients that turn gross revenue into taxable income under the simplified regime:

• 0.35 for services not listed elsewhere. This is the one for an AL in a house or apartment (article 31(1)(c)). The 0.15 coefficient for hotel-type activities expressly excludes AL in a house or apartment (article 31(1)(a)).
• 0.50 for an AL in a house or apartment located in a containment area (article 31(1)(h)).

As an illustration, on 20,000 euros of gross revenue the taxable amount is 7,000 euros at 0.35 and 10,000 euros at 0.50, before the adjustment described below. Whether your property is in a containment area is decided by the municipality. Our guide on registering an AL in Porto covers the Porto rules.

Taxed together with your other income

The taxable amount is added to the rest of your income and taxed under the general rules (article 31(3) CIRS). The final tax therefore depends on your total income for the year, not only on the AL.

The 15% expenses rule

The deduction built into the 0.35 coefficient is partly conditional on real expenses. If the items listed in the law add up to less than 15% of your gross revenue, the difference is added to your taxable income (article 31(13) CIRS). The items that count include:

• the specific deduction, or mandatory social-security contributions if higher;
• staff costs reported to the tax authority;
• rent paid for property used in the activity;
• 4% of the property's tax value (valor patrimonial tributário) for a property used in AL, for an owner, usufructuary or surface-right holder;
• other invoiced expenses tied to the activity, such as electricity, water, communications, insurance and consumables.

Expenses used only partly for the activity count at 25% (article 31(14)). You must identify the invoices and the properties used for AL on the Portal das Finanças by the end of February of the following year (article 31(15), as amended in 2025). The paragraph on the 15% rule names points (b) and (c) of paragraph 1, not the 0.50 of point (h), so ask your accountant how it applies if your AL is in a containment area.

The tourist tax in Porto

The Porto municipal tourist tax is 3 euros per night per guest, up to 7 consecutive nights. Children aged 12 or under, stays for medical reasons and a few other cases are exempt with proof. The AL asks the guest to pay it. It is a charge on the guest, not income of the owner.

VAT

The VAT Code exempts the rental of immovable property, but the exemption does not cover lodging services provided in hotel or similar activity (article 9(29)). Whether VAT applies to your AL, and at what rate, depends on how it is operated, so confirm it with your certified accountant before you issue invoices.

If you live abroad or hold the property in a company

This guide covers an individual taxed under IRS. If a company owns the property, or you are not resident in Portugal, different rules apply, so check your case with a certified accountant.

What Urbanis does

We send you the revenue figures and an annual statement for your accountant, who files your return. We do not file it for you. To compare the AL with a lease, read short-term or medium and long-term rental in Porto.

Frequently asked questions

What share of AL income is taxable under the simplified regime?

35% of gross revenue for an apartment or house (coefficient 0.35), or 50% in a containment area (coefficient 0.50). The result is added to your other income and taxed at the general rates (article 31 CIRS).

Do I have to show a minimum amount of expenses?

Under the 0.35 coefficient, if the items listed in the law add up to less than 15% of your gross revenue, the difference is added to your taxable income (article 31(13) CIRS).

How much is the tourist tax in Porto, and who pays it?

3 euros per guest per night, up to 7 consecutive nights. The guest pays it and the AL asks for it. Children aged 12 or under are exempt, among other cases.

Does an AL charge VAT?

The VAT Code exempts property rental but not lodging services in hotel or similar activity (article 9(29)). How it applies to your AL depends on how you operate, so confirm it with your accountant.

Related guides

• How to choose an AL management company in Porto
• How to register an alojamento local in Porto in 2026
• Insurance for an alojamento local in Portugal: what is mandatory
• What a short-term rental manager does for owners in Porto
• Short-term or medium and long-term rental in Porto

This article is general information, not legal or tax advice, and does not replace guidance from a professional on your specific case.