Since the introduction of the Simplified Regime in 2001, taxation of income from tourism activities in Category B dropped from 20% to 15%. In contrast, over the same period, income from real estate leasing has been a yo-yo.  Historically taxed at 25%, the levy on long-term renting dropped to 15% in 2001 where it remained until 2013 when it almost doubled, jumping from 15% to 28%. If long-term vacancies are a scarcity in historic neighbourhoods, excessive taxation of landlords will do nothing to increase supply. Local incentives need to be found to resolve neighbourhood problems. Estimates show that only 8% of overall Local Lodging offerings  in Portugal are in these historical localities. Penalising the other 92% does nothing to address the issue. To the contrary, it creates a new dilemma. Continue reading →

Since Local Lodging was reformed into its current configuration in 2014, almost a third of total offerings have been registered and have begun to pay tax. Surprisingly, even though millions of tourists can find holiday lets online, Portuguese inspectors only manage to discover a handful of non-compliant operators. This compares poorly to Barcelona where city examiners raised €600,000 in fines in just 6 months. Once again, the proposed tax hike leaves cheaters untouched while penalising those who play by the rules.

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