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Short-term rentals, known in Portugal as Alojamento Local (AL), have become one of the most popular ways to welcome guests across the country. If you’re thinking about converting your apartment into a short-term rental, it’s important to understand that this model comes with specific rules, responsibilities, and a few challenges along the way.
In this guide, we walk you through the essential tips, regulations, and practical insights you need to manage a short-term rental in Portugal with confidence.
New Short-Term Rental Law in Portugal
October 23, 2025
On 1 November 2024, the Portuguese government introduced important amendments to the local accommodation (Alojamento Local – AL) regime through Decree-Law No. 76/2024, published on 23 October 2024.
These updates roll back several restrictions created under the 2023 Mais Habitação (More Housing) program. The goal is to bring AL regulations back in line with real housing needs while restoring confidence and stability in the rental market.
In simple terms, this new package addresses many of the issues and complaints raised since the Mais Habitação reforms. It revokes the following measures:
- Suspension of new AL licence registrations
- Automatic expiry of inactive licences when no proof of activity was provided
- Ban on transferring AL licences when a property was sold
- Mandatory review of all existing licences in 2030, as required by the 2023 law
- Five-year validity rule, which required all AL licences to be renewed every five years
What is the AL License?
An AL licence (Alojamento Local licence) is the official authorisation needed to legally operate a short-term rental in Portugal. With this licence, property owners and investors can rent their homes to guests for stays of up to 30 days on platforms like Airbnb, Booking.com, and VRBO.
The licence is issued by the local municipality (Câmara Municipal) after the owner submits a registration request and shows that the property meets the required safety, hygiene, and legal standards. Once approved, the property is added to the national RNAL database and given a unique AL number, which must be included in all rental listings and advertisements.
The Short-Term Rental Market in Portugal
Portugal’s short-term rental market remains one of the strongest segments of the country’s tourism landscape, supported by another record-breaking year for travel. According to 2024 data from INE and Turismo de Portugal, the country welcomed over 31.6 million guests and recorded more than 80 million overnight stays, marking steady growth compared to 2023.
Around 70% of these overnight stays came from international visitors, showing just how important foreign tourism continues to be for local accommodation, especially in cities like Lisbon, Porto, and in coastal regions such as the Algarve.
This growing demand naturally boosts the short-term rental sector. With more travellers choosing apartments, studios, and private homes over traditional hotels, AL properties play a major role in absorbing the country’s tourism flow. Strong year-round numbers also show that short-term rentals aren’t just seasonal—well-located properties can see consistent bookings beyond the summer months, particularly in destinations with cultural tourism, business travel, or mild winter climates.
How to Obtain a Short-Term Rental Portugal License
Getting a short-term rental licence in Portugal — known as an Alojamento Local (AL) licence — is a relatively straightforward process, but it does require following specific steps and meeting local regulations. Here’s how it works:
To start, the owner must submit an AL registration request to the local municipality (Câmara Municipal) where the property is located. This is typically done online through the city’s digital services. During the application, you’ll need to provide basic information about the property, the owner, and the type of AL you plan to operate (apartment, villa, guesthouse, etc.).
Once the application is submitted, the municipality will issue a provisional AL number, allowing you to begin operating immediately while final checks are carried out. The property must comply with safety and hygiene standards, including having emergency contacts, a fire extinguisher, a first-aid kit, proper signage, and valid insurance.
After approval, the property is added to the RNAL database and receives a formal AL number, which must appear on all listings and advertisements. You’ll also need to register on SIBA, the system used to report all guest stays to AIMA.
Required Documents for an AL License in Portugal
- ID document (Passport or Citizen Card) of the owner
- Portuguese Tax Number (NIF)
- Property deed (Escritura) or
- Land Registry Certificate (Certidão do Registo Predial)
- Caderneta Predial (Tax Registration Document)
- Condominium authorisation (only if required for certain building types or uses)
- Property floor plan (when requested by the municipality)
- Declaration of compliance with AL safety and hygiene rules
- Valid insurance policy covering liability and property risks
- Emergency contact information for guests
- Name and contact of the responsible person (if different from the owner)
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Best Locations for Short-Term Rentals in Portugal
Portugal has several hotspots where short-term rentals perform exceptionally well. Demand varies by season and traveller profile, but the locations below consistently attract strong occupancy and premium nightly rates.
Lisbon
Lisbon remains one of the strongest markets for short-term rentals thanks to its vibrant mix of culture, food, and year-round tourism. Areas like Baixa, Chiado, and Alfama continue to attract visitors looking for central, authentic experiences, while Príncipe Real appeals to travellers seeking a more modern and trendy vibe. With constant demand from tourists and business travellers, Lisbon offers some of the highest occupancy rates in the country.
Porto
Another top performer is Porto, drawing visitors with its riverside charm, historic centre, and wine culture. Short-term rentals are especially successful around Ribeira and the downtown area, where guests can easily explore the city on foot. Cedofeita also attracts younger travellers and digital nomads thanks to its creative and laid-back atmosphere. Porto’s popularity has grown steadily, making it a reliable location for consistent bookings.
Cascais
In greater Lisbon area, Cascais combines coastal living with easy access to Lisbon, making it a popular choice for weekend getaways and longer stays. Rentals near the town centre, Monte Estoril, or the Guincho coastline attract guests looking for beaches, good restaurants, and a relaxed lifestyle. Cascais appeals to a broad audience, from families to remote workers, thanks to its safety and seaside charm.
Sintra
Sintra offers a completely different experience, with its lush forests, palaces, and romantic scenery. Short-term rentals near the historic centre or in quieter pockets like São Pedro are highly sought after by travellers exploring cultural landmarks. Sintra’s unique appeal makes it a year-round favourite for tourists seeking nature and heritage in one place.
Algarve
In the southern part of Portugal, the Algarve stands out for its sunny climate and beach-driven tourism. Towns like Lagos, Albufeira, and Vilamoura consistently see high demand, particularly during spring and summer. With beautiful coastlines, outdoor activities, and resort-style living, the Algarve appeals to families, couples, and international visitors looking for both relaxation and adventure.
Taxes on Short-Term Rental Portugal
Short-term rentals in Portugal (Alojamento Local – AL) are taxed as business activity, and owners must choose a tax regime, understand VAT rules, and declare their rental income correctly. Here’s a simple breakdown of how it works:
Tax Regimes for Short-Term Rentals in Portugal
Short-term rentals in Portugal are subject to corporate tax activity under Category B, and owners can choose between the simplified regime or organised accounts.
Under the simplified regime, which most AL hosts use, the tax office automatically applies a percentage to your rental income to calculate how much is taxable. This option keeps things straightforward and avoids the need for full accounting records.
For larger operations or owners with higher expenses, the organised accounts regime may be a better fit. In this case, you can deduct real costs such as utilities, cleaning, maintenance, or mortgage interest, but you must work with a certified accountant and maintain detailed bookkeeping.
Value added tax (VAT)
VAT (in Portuguese de called IVA)applies differently depending on the type of short-term rental you run. Most AL apartments and villas are exempt from VAT, as they are considered accommodation without hotel-style services.
However, if the property operates more like a guesthouse or provides services similar to a hotel—such as daily cleaning, breakfast, or reception—then VAT may apply at the standard rate.
Because local rules can vary, it’s important to check whether your rental setup falls under VAT exemption or if registration is required.
Difference Between Short-Term, Mid-Term, and Long-Term rentals
Short-term, mid-term, and long-term rentals each serve different needs and attract different types of tenants in Portugal.
Short-term rentals (Alojamento Local – AL)
Designed for stays of up to 30 days and mainly cater to tourists, business travellers, and weekend visitors. They’re furnished, highly flexible, and usually listed on platforms like Airbnb or Booking.com. This model offers strong seasonal demand but comes with more regulations and higher management effort.
Mid-term rentals
Cover stays from 1 to 12 months and appeal to expats, digital nomads, students, and professionals on temporary assignments. These rentals are normally fully furnished with utilities included, offering a balance between flexibility and stability. They have fewer regulations than AL properties and provide steadier monthly income without constant guest turnover.
Long-term rentals
begin at 12 months or more, often running for several years. They attract local residents, families, and expats who want a permanent home. These properties are typically unfurnished or partially furnished and follow Portuguese lease laws (NRAU).
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Frequently Asked Questions
What makes short-term rentals in Portugal a popular choice for property owners?
Short-term rentals in Portugal attract owners because of the steady demand from tourists. Many visitors prefer staying in local homes, making these rentals a profitable option for owners.
Can non-residents invest in Portugal’s short-term rentals market?
Yes, non-residents can invest in Portugal’s short-term rentals. The Portuguese government allows foreign ownership, and many investors earn income from renting to tourists.
How does the tax system work for Portugal’s short-term rentals?
Property owners must pay taxes on rental income in Portugal. Non-residents pay a flat rate of 28%, while residents can opt for progressive tax rates based on their total income.
What is the AL license for short-term rentals in Portugal?
The AL (Alojamento Local) license allows property owners to legally operate Portugal’s short-term rentals. This license ensures the property meets safety and quality standards required by law.
Are there specific locations where short-term rentals in Portugal are in high demand?
Yes, Lisbon, Porto, Algarve, and Madeira are popular for short-term rentals in Portugal. These areas attract a large number of tourists, ensuring high occupancy rates for rental properties.
What are the main requirements to operate Portugal’s short-term rentals legally?
Property owners need an AL license, insurance, and safety measures like fire extinguishers to run Portugal’s short-term rentals. They must also register their rental activity with local authorities.
Do short-term rentals in Portugal have good income potential?
Yes, Portugal’s short-term rentals provide steady income, especially in tourist-heavy areas. Many property owners benefit from high occupancy rates and demand for vacation rentals.
Can I manage short-term rentals in Portugal from abroad?
Yes, many owners manage Portugal’s short-term rentals remotely. Some hire property management companies to handle bookings, maintenance, and guest needs while they remain abroad.
Are short-term rentals in Portugal a good long-term investment?
Yes, Portugal’s short-term rentals offer a stable market for long-term investment. The tourism industry’s growth supports rental demand, making it a reliable income source for property owners.
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