New “Mais habitação” law approved & implemented
News: Legislation Portugal
New Alojamento Local legislation approved & active.
The Portuguese government has recently brought into effect the “Mais Habitação” bill of law through which significant changes are introduced in the holiday rental, real estate and housing sector. On October 7, 2023, Law 56/2023 of October 6 came into force, curbing the issuance of short term rental (AL) licences, mostly effecting apartments throughout Portugal with the exemption of low density zones such as the Aljezur, Vila do Bispo & Tavira in the Algarve.
In this latest article we’ll highlight the biggest changes related to holiday rental in Portugal.
Suspension of new local accommodation registration for apartments.
Exemptions on the new AL legislation
The issuance of new registrations, in the form of apartments and accommodation establishments integrated into an autonomous fraction of a building, is suspended throughout the national territory, with the exception of the interior territories / low density zones identified in Ordinance no. 208/2017, of 13 July.
Municipalities can expressly define, in their respective Municipal Housing Charters, approved under the terms set out in article 22 of Law no. 83/2019, of September 3, the appropriate balance of housing supply and student accommodation in their respective territory, which allows the end of the suspension provided for in the previous paragraph, without prejudice to the identification of the rules and limits for the use of housing units for local accommodation.
The suspension continues in all or part of the area of the municipality in which the situation of housing shortage has been declared, in accordance with article 62 of Law no. 83/2019, of 3 of September.
Alojamento Local Accommodation – License registration, duration and renewal
It was determined that Local Accommodation registrations will have a duration of 5 (five) years, being renewable for identical periods, counting the renewal from the date of issuance of the opening license.
All Local Accommodation registrations issued up to October 7, 2023, will be re-evaluated during the year 2030, being renewable for 5 (five) years, starting from this first re-evaluation.
Renewal of registration requires deliberation by the competent municipality, within the period defined in its own regulations, which may object based on the requirements and/or as provided for in the Municipal Housing Charter, if applicable.
Inactive Registrations & expiry of registrations
There is a period of 2 months, counting from the date of entry into force of Law nº 56/2023 of October 7, 2023, for holders of Local Accommodation registration to provide proof of maintenance of the exploration activity, by presenting contribution declaration demonstrating the effectiveness of carrying out the activity, through the Balcão Único Eletrónico platform, attaching for this purpose the last income declaration for IRS or IRC purposes, or, the last periodic VAT declaration, with reference to the operating activity of Local Accommodation.
If it is an activity registered in 2023, a VAT declaration must be submitted or, if this is not available, a declaration of commencement of activity must be submitted to the Finance Department.
The necessary updates to the Balcão Único Eletrónico platform carried out by the Agency for Administrative Modernization have not yet been carried out, which prevents the immediate performance of the activity test.
If the holders do not do so, their Local Accommodation license registration will be cancelled, by decision of the president of the territorially competent municipal council.
It should be noted that the obligation to prove activity does not cover the operation of AL units in personal and permanent housing, as long as this operation does not exceed 120 days per year.
Local accommodation in condominiums
As long as a Local Accommodation establishment is registered in an autonomous fraction, in a building constituted under a horizontal property regime, and which is intended for housing, according to its constitutive title (PH), the condominium may allow the exercise of Local Accommodation activity or prohibit the respective exercise, with 100% agreement from the respective permilage.
In cases where the Local Accommodation activity is already carried out in one or more autonomous units of the building or in part of a building capable of independent use, in a meeting of condominium owners, and by decision of 2/3 of the building’s permilage, the condominium may oppose the continuation of the exercise of the Local Accommodation activity in the aforementioned fraction(s), unless the constitutive title (PH) expressly provides for this use for the exercise of the Local Accommodation activity or there has been a deliberation expressed, in a meeting of condominium owners, where this use has been safeguarded for this purpose.
The assembly of condominium owners can and should determine, by majority vote, that Local Accommodation establishments provide emergency telephone contact, which is provided to others.
We advise owners of Local Accommodation establishments located in condominiums to be accompanied by a competent professional knowledgeable about the subject on the day of the General Assembly.
CEAL – Extraordinary Contribution on Local Accommodation
It was also decided that Local Accommodation establishments (AL) will start paying an extraordinary contribution (CEAL), which has as its tax base the application of an economic coefficient (which considers the area of the property and income) and a pressure coefficient urban planning (defined by indicators to be published by the Ministry of Finance, based on information on changes in income).
The rate applicable to this tax base is 15% and cannot be deducted when determining taxable profit under IRC.
The CEAL will not apply to properties that are not autonomous units or parts and divisions capable of independent use, as well as to Local Accommodations that carry out their activity in their own permanent housing (HPP), as long as they do not exceed 120 days of operation per year.
CEAL will also not apply to Local Accommodation units installed in properties located in low-density territories (annex to Ordinance No. 208/2017, of July 13), even if they are integrated into autonomous fractions of buildings. More details regarding the newly introduced Ceal tax will be published in a future article.