Licensing requirements for holiday lets Nº 7.jpg

Licensing requirements for holiday lets Nº 7

Conclusion: Not so bad after all

SINCE THE summer of 2005, many press articles have appeared on the subject of Letting Licences. Most have been alarmist. Certainly, many people touched by the issue are in a near panic. Due to the lack of co-ordination between inspectors, tourist office and câmaras, many owners rightfully fear a “Catch 22”. For example, those most directly affected by inspections in the Almancil area are faced with a particular problem in that Loulé Câmara only offers a solution that is inadequate and inappropriate to most owners.

Yet, despite these shortcomings, the vast majority are not faced with disaster but rather an opportunity to put things right. In fact, most will eventually be better off than before:


• After a one-off expense for licensing, annual tax savings could be thousands of euros each year;

• If your property is intended for mixed usage, local regulations often offer a relatively simple and workable solution;

• In câmaras where few options exist today, new solutions are under study and soon should leapfrog into place;

• Those with relatively modest rental income can still be free from bureaucracy by remaining non-commercial;

• Non-residents should have a “nil-cost” solution, recovering all Portuguese taxes and overheads in their home jurisdictions via deductions and tax credits.

In conclusion, there are a number of choices that can prove to be truly viable solutions. However, if you fail to choose and take action, it may well be an inspector who makes the choice for you. Be certain of one thing: it is unlikely to be an alternative that will please you.

In the end, only one option disappears: none of the above. Those who fail to declare and pay their taxes, those who refuse to license their rental property, those who simply take money out and put nothing back, these are the ones who will have to “face the music”. Besides the threat of inspections and fines, there are serious civil liability questions to contend with, in addition to eventual tax evasion enquiries. It hardly seems worth the risk.

Compliance is the order of the day. Although a nuisance, the options outlined in these articles are surprisingly favourable in the long run and will allow you, and Portugal, to create a win-win solution for all concerned.    

• Dennis Swing Greene is Senior Partner and International Fiscal Consultant for euroFINESCO. Private consultations can be scheduled at our offices in Guia (Albufeira) and Lisbon (Chiado). In the Algarve, call 289 561 333 or in Lisbon, 213 424 210 or e-mail: [email protected], or on the internet at