The European Commission has initiated an in-depth investigation into tax exemptions granted by Portuguese authorities to companies operating in the Madeira Free Trade Zone. The EU Commission has questions as to whether these tax breaks comply with EU guidelines.
Recent legislative reforms have created tighter rules for operators of Local Lodging establishments. Under the new regulations, Councils will have a say in setting occupancy quotas within their municipalities. Condominiums can launch complaints regarding “AL” based disturbances and misuse in their buildings.
Here are seven newly approved regulations that will impact operators from major investors to individual owners.
- Multi-risk insurance and liability coverage
Local Lodging establishments will need to have multi-risk insurance to cover possible damages due to increased use of the common areas in the building. The new law goes further, holding the “AL” owner mutually accountable for any damage caused by guests to common areas. The absence of insurance coverage will be grounds for cancellation of the “AL” permit.
- “Information Book” with rules and standards in four languages
Also new in 2018, Local Lodgings accommodations are obliged to have an Information Book, available in Portuguese and English as well as in at least two other foreign languages, containing detailed rules about the collection and separation of municipal waste and the operation of household appliances. In addition, the Book should specify the care to be taken to avoid disturbances that might affect neighbours as well as the telephone contact of the operator of the “AL” establishment. The Book should also contain other condominium regulations and practices relevant to housing and common areas.
- “AL” signs
An “AL” identification plaque for Local Lodging becomes mandatory once again in all holiday letting accommodations. In the case of apartments, a small sign should be placed at the entrance. The exact specifications of these signs have as yet to be specified.
- Condominium charges may become more expensive
In apartment buildings, condominiums will be able to approve condo fee supplements of up to 30% for owners engaged in Local Lodging for corresponding expenses resulting from the increased use of common areas. To this end, the condominium must pass regulations stipulating the criteria approved by at least two-thirds of owners.
- Complaints from neighbours may lead to closings
When agreed by more than half of the owners, condominiums will be able to challenge Local Lodgings operators, disapproving acts that disturb the normal use of the building. This opposition shall be referred to the City Council, responsible for the final decision regarding licensing suspension.
- Quotas by Council Parishes
City Councils will be able to create ‘containment zones’ with limits to the installation of new local lodging establishments in areas of greater burden on long-term rental housing. Following a decision by the municipal assembly, local authorities will have one year to create these regulations. They can also adopt preventive measures and suspend “AL” establishments in these containment zones.
- Inform Airbnb when closing an “AL” activity
The holder of a Local Lodging registration must communicate to the Tax Authority the closure of “AL” activity within 10 days after the occurrence. Also, Owners must notify electronic reservation platforms, such as Airbnb or Booking, of the activity change.
The approval of these changes has stirred a whirlwind of controversy as local sentiments have often taken precedence over national interest. With the 2019 Budget looming on the horizon, it appears likely that we have not seen the end to the political seesaw battle surrounding Local Lodging legislation.