Alojament Local

How to apply for an AL licence in Portugal - UPDATE 31/10/2024

A new decree-law that reverses some of the restrictions introduced under the previous Socialist government’s ‘Mais Habitação’ (More Housing) programme. The short-term holiday rental sector in Portugal – known as the ‘Alojamento Local’ (AL)

One of the most significant changes is the elimination of mandatory license renewals and restrictions on new registrations, which restores the decision-making authority to municipal councils. This transition is anticipated to help municipalities better manage the availability of short-term rentals, allowing them to respond more effectively to the needs of their communities. The government’s decision, which is effective from 1st November 2024, has been praised by The Portuguese Association of Hotels, Restaurants, and Similar Establishments (AHRESP) stating it provides a more balanced and appropriate approach to AL. The new law also removes the automatic expiry of inactive licences and planned re-evaluations of licences in 2030, offering operators “increased legal certainty and business stability,” AHRESP points out, adding that short-term rental businesses can now invest and grow without the looming threat of sudden licence cancellations due to factors beyond their control. A notable change is that condominiums no longer have the "absolute power" to approve or cancel AL licenses without justification. Furthermore, the new law permits the transfer of rental licenses when properties are sold. The government has also clarified the acceptable use cases and operational guidelines for short-term rentals.

AHRESP says it has always opposed the “unjustified AL restrictions” and has “constructively worked together with political decision-makers to present fair and balanced solutions. That is why we are happy to see that our concerns – those of our members' concerns have been acknowledged. We will continue to follow closely the implementation of these measures, collaborating actively with the government and municipalities,” the association adds. For owners of properties used for short-term rental, the new law not only removes controversial measures like the non-transferability of licences, licence expiration, and the total ban on new licences in coastal areas but also gives less control to condominiums to restrict or cancel AL licences in residential buildings and even changes the maximum guest capacity allowed in each AL. This new legislation is great news for investors and will allow short-term lettings to continue to play a vital role in Portugal’s tourism economy and sustainable community development

If you are thinking of renting your holiday home in Portugal, you will need a Alojament Local (AL) license. Restrictions which were implemented in 2023 prevented new applications for this License being granted on Apartments. These restrictions are currently being reviewed and we are hopeful they will soon be lifted. Contact us for details.

Renting a holiday home in Portugal

The first thing you should know is that only legal property can function as a holiday home to rent in Portugal.

For both apartments and villas, it is mandatory under Portuguese law that the accommodation has a habitation licence (or "licença de utilização", in Portuguese). This document, issued by the Câmara Municipal (city council) of the area where the property is located, basically defines the type of use permitted for a given building or fraction: habitation or non-habitation purposes (commerce, services or industry).

If the property is legal, and with a habitation licence issued, the next step is to request a specific licence from the Câmara Municipal to rent your property as a holiday home.

Applying for an AL Licence

A local accommodation licence ("Licença de Alojamento Local") — also known as AL Licence — allows you to legally rent residential accommodation for short-term tourism.

Each licence has a unique number and is specific to an accommodation. This means that if a homeowner has several properties intended for tourist accommodation, each property must have its own licence.

In Portugal, obtaining an AL licence is mandatory. The main websites promoting holiday homes, such as Booking or Airbnb, also require an AL licence number to advertise the accommodation online.

Requirements to obtain an AL Licence

To have access to an AL licence — and pass the prior inspection carried out by the local Câmara Municipal — the accommodation must meet several requirements stipulated by Portuguese law, namely safety and regulatory obligations. This includes:

Providing a safety pack in the accommodation for the use of guests;
Having civil liability insurance;
Equipping the accommodation with a "Livro de Reclamações" (complaints book) and an information book (which must be translated into 4 languages).

The biggest advantage of hiring a professional rental management company is that the property owner does not have to worry about anything. They will take care of:

Assist in the application for AL license
Accompanying municipal inspections and verifications by regulatory bodies such as ASAE;
Setting up safety equipment (which has very specific installation and maintenance rules!);
Updating the property efficiently and within legal deadlines, if there are any future changes to AL laws.

Ignorance of the law will not exempt you from receiving fines in case of non-compliance, so make sure that whoever is managing your holiday home rental is well acquainted with regulations and legal updates.

On the other hand, a professional holiday rental company in Portugal will also take care of the promotional side of things. From ensuring staging for professional photographs to creating media content such as text and uploading it to various promotional platforms, so let the experts do it all for you!

With the Internet as your holiday home "shop window", make sure it is appealing and professional to get the customers and bookings you need to guarantee the success of your holiday rentals.

When you apply for an AL license it is also mandatory to register the start of this business activity with the Portuguese tax authorities. We can recommend an accounting team, with years of experience in assisting foreign holiday homeowners, to help you with this.

Tax consultancy for your holiday home in Portugal

Always keep in mind that renting a holiday home in Portugal is first and foremost a business. As such, you should view this activity as any other commercial activity, including in tax terms.

Counting on tax advice from a specialised team, will save you not only time, but also money. For example, there are situations in which opening a company in Portugal may be more advantageous for tax purposes than renting on an individual basis... only an accountant can help you make this and other decisions that will directly impact your holiday home rental income.

Also keep in mind that all income earned in Portugal is subject to the obligation of issuing invoices for each payment received, as well as paying tax on that income. This includes, of course, income on holiday home rentals.

The support of an experienced accountant will ensure that you comply fully, on time and without hassle with all your tax obligations in Portugal.