Planning to invest in Portugal’s luxury property market and particularly short-term rentals?
Then understanding the Alojamento Local (AL) licensing rules is essential, and these regulations apply whether you are investing in Lisbon apartments, Algarve villas, or regional tourism properties.
Portugal’s short-term rental laws have undergone major reform in recent years, as the government attempts to balance housing affordability for residents with the economic importance of tourism and foreign property investment.
After a proposed nationwide freeze on new AL licences proved ineffective, Portugal adopted a municipality-led regulatory model, allowing local councils (Câmaras Municipais) to control licensing rules based on local housing pressures.
So here is our clear, investor-focused step by step guide to staying compliant with Portugal’s AL regulations in 2026.
Is your property eligible for an AL licence?
Before listing your property on Airbnb, Booking.com, or similar platforms, you must ensure it meets Portugal’s AL property requirements, with:
- A valid Licença de Utilização, confirming the property is legally authorised for residential use
- Mandatory safety equipment, including:
- Fire extinguisher
- Fire blanket near the kitchen
- Visible first-aid kit
- Prominent display of Portugal’s national emergency number (112)
- Livro de Reclamações (complaints book) – both physical and electronic versions are legally required
Failure to meet these conditions can result in fines or licence suspension.
Important changes to Portugal’s AL licensing rules
Recent reforms have made the Alojamento Local framework more predictable for long-term investors:
Permanent AL licences – these licences are no longer issued with a fixed expiry date. Instead, they remain valid indefinitely, provided the property stays compliant with national and municipal rules.
Transferability on sale – in many municipalities, AL licences can once again transfer with the property when sold, preserving resale value. However, local councils may still impose restrictions, so due diligence is essential.
Condominium approval rules – prior approval from neighbours is no longer required to register an AL licence (except for hostels). That said, condominium owners can still vote to request suspension if guests repeatedly cause disturbances, so professional management is vital.
Guest capacity limits – national law permits up to nine rooms and 27 guests per property, though apartments and local regulations may impose stricter limits.
Check out location-based restrictions and how containment zones work
Although national AL rules have eased, local regulation now plays a decisive role:
- Lisbon and Porto maintain designated AL containment zones, where new licences are highly restricted
- Outside major cities, licensing opportunities remain strong
- The Algarve continues to allow short-term rentals, although some municipalities (such as Vila Real de Santo António) are tightening controls
- Inland regions often offer simpler licensing, reflecting government efforts to promote tourism diversification
For more on this, see these guides:
- Best Places to Invest in Portugal Real Estate in 2026
- Portugal Real Estate Market Trends – What’s Growing, What’s Slowing, and Where Smart Investors Are Buying
Be smart on taxation and running costs for AL Properties in Portugal
Operating an AL is treated as a business activity under Portuguese tax law so you need to know about:
Income tax – most owners use the Simplified Tax Regime, where tax is applied to approximately:
- 35% of gross income, or
- 50% in designated containment zones
VAT (IVA) – VAT registration is required once annual turnover exceeds €14,500 and non-resident owners may need to appoint a fiscal representative
Tourist tax – short-term rental owners must collect local tourist tax from guests and remit it to the municipality (e.g. €4 per night in Lisbon, €3 in Porto).
Mandatory insurance – civil liability insurance specific to short-term rentals in Portugal is compulsory. Failure to maintain coverage can result in licence cancellation.
Ongoing compliance obligations for AL owners
- Report foreign guests via the SIBA platform (AIMA) within three working days of arrival
- Display an official AL identification plaque at the property entrance
Non-compliance can lead to fines, inspections, or suspension of the AL licence.
Paul Stannard, chairman and founder of Portugal Pathways, commented: “Portugal’s AL licence system is more stable than in previous years, but increasingly localised. Successful investors combine careful municipal due diligence with professional tax and legal advice.
“Understanding Portugal’s short-term rental laws before you buy is absolutely key to creating the best rental yields and long-term asset values.”
About Portugal Pathways
Portugal Pathways has supported hundreds of Golden Visa residency-by-investment applications and provides expert guidance through its professional supply chain network on luxury property, wealth management, and tax optimisation, including post-NHR tax regime planning, as well as private healthcare, IFICI tax incentive applications, money transfers and bespoke relocation solutions to enhance life and investments in Portugal.
Disclaimer: The information on the Portugal Pathways website and in email communications is for general informational purposes only and should not be construed as legal, tax, or financial advice. You should consult and check with a qualified professional advisor before relying on any information provided on this website or in email communications. As it relates to investments in Golden Visas or other wealth management solutions offered by regulated and professional advisors, it is important to note that past performance is no guarantee of future returns. Private equities can be highly illiquid and come with risk and should always be under professional independent advice.
