One of the innovations of the new Local Lodging legislation is just how easy and potentially deadly enforcement has become. It’s as easy as booking an apartment or villa in the first place. Just go to a holiday booking website, query your preferences and up come a host of detailed local listings anywhere you wish to go.
Choosing accommodations is easy and painless. Unfortunately, it’s just as simple for ASAE inspectors in Portugal to discover unregistered, illegal offerings. And, although easy, it will be anything but painless.
The new legislation specifies that any advertised offering must display the Local Lodging logo (AL) together with the respective registration number. Failure to comply can lead to cumulative fines that can go into the tens of thousands of euros for individuals and hundreds of thousands of euros for companies. Stated more bluntly, advertise without the AL logo and ID number and you’re a “sitting duck”.
Put into context, the new legislation is built on a “carrot and stick” philosophy. On the one hand, it recognises Local Lodging as a legitimate tourist activity in its own right, distinct from hotels and other conventional holiday offerings.
Registration couldn’t be simpler and more sensible. Only a minimum of bureaucracy is involved. Reporting requirements during business operations is also straightforward. Taxation is minimal. Owners/operators pay, on average, less than 4% of their gross turnover. Property Managers are taxed at just ±1%.
Play by the rules and the only real problem remaining is to find holidaymakers to occupy your Local Lodging offering. Bookings are more promising than ever before. Low cost airlines bring millions of new tourists to Portugal annually. In fact, Portugal has become an “in” destination for young travellers. Senior baby boomers entering retirement throughout Europe also have the time and money to chase the sun whenever they like. Tourism isn’t just for high season beach holidays any more. It’s a 365-day phenomenon. For holiday lets, owners can now realistically aim for 30-40 weeks and more annually rather than just the short summer months.
On the other hand, failure to comply promises dire consequences. The following table illustrates the cumulative fines that inspectors can apply. The message couldn’t be clearer: it’s time to comply and “get with the programme”!
By Dennis Swing Greene
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Dennis Swing Greene is Chairman and International Tax Consultant for euroFINESCO s.a.
www.eurofinesco.com
