Short-term rentals can be a very profitable way to generate income from a property, but it is important to understand the taxes involved before starting the activity. In Portugal, income from short-term rentals must be declared to the tax authorities.

Depending on how the activity is registered — in your personal name or under a company — the tax framework may be different.

Personal income tax or corporate tax

If the short-term rental is registered under an individual owner, the income is taxed under personal income tax (IRS).

If the property is operated through a company, the income is taxed under corporate tax (IRC) like any other business activity.

The most suitable option depends on several factors such as the number of properties, revenue and tax planning.

Simplified tax regime

In the simplified regime, the Portuguese tax authority assumes that only 35% of the total revenue is taxable profit.

For example:

• If the property generates €20,000 per year

• Only €7,000 are considered taxable income

That amount is then taxed according to the owner’s personal income tax bracket.

This regime is common because it simplifies taxation.

Organized accounting

When the activity is operated through a company, organized accounting normally applies.

In this case:

• All real expenses can be deducted

• Tax is calculated on the actual profit

Expenses may include:

• Cleaning

• Laundry

• Maintenance

• Platform commissions

• Management services

• Utilities (water, electricity, internet)

VAT on short-term rentals

Short-term rental accommodation in Portugal is subject to 6% VAT, applied to the accommodation value.

However, many small operators benefit from the VAT exemption regime if their annual revenue does not exceed the legal threshold.

Once that limit is exceeded, VAT must be charged to guests and paid to the tax authorities.

Tourist tax in Lisbon

Lisbon also charges a municipal tourist tax, paid by guests per night up to a maximum number of nights.

This tax is collected from the guest and then transferred to the municipality.

Issuing receipts when the property is owned by a company

When the short-term rental is operated through a company, it is necessary to issue the correct invoices and receipts for each stay.

When we manage the property, we also handle the issuance of receipts and the administrative management of the activity, ensuring everything is done correctly and in accordance with Portuguese tax rules.

This allows the property owner to avoid dealing with bureaucracy.

Is it still profitable after taxes?

Even with taxes and operating costs, short-term rentals can still generate significantly higher returns than traditional long-term renting, especially in cities with strong tourism demand like Lisbon.

With the right pricing strategy, good occupancy and professional management, it is possible to maximize the profitability of the property.

Want to know how much your apartment could earn as a short-term rental? Send us the address and type of property.