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New law regulates holiday lets


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Dennis Swing Greene is Senior Partner and International Fiscal Consultant for euroFINESCO s.a

A NEW decree-law comes into effect next month, establishing a new judicial regime for the installation, development and functioning of tourist developments.

The reforms created in the law are based on three fundamental principles: less bureaucracy, more responsibility to developers and better supervision and control with stiffer consequences for breaches of regulations.

Integrated into the government’s Simplex initiative, one of the primary purposes is to eliminate needless bureaucracy, introducing agility and responsiveness into what traditionally has been a painfully slow process. The intention is to reduce, by 40 per cent, the time required for approval, moving from a current average of 485 to 270 days.

The new decree-law concentrates nine separate judicial diplomas into a single piece of legislation and is the most sweeping reform in the last decade.

Currently, 21 subcategories exist of tourist developments. eleven new designations will take their place without altering the purpose or identity of each or the current trademark being used. In addition, there is a new harmonised classification system which reflects not only the physical installations but also the quality of services provided.  These ratings will be updated on a four years basis to reflect the evolution and management of facilities.

Local lodging

A new catch-all category has been created which will be regulated by local councils: Local Lodging.  The new statutes define this category as follows:

a) Definition: villas, apartments and guest houses providing short-term lodging for consideration not meeting established criteria of an Empreendimento Turístico (Tourist Development).

b) Minimum standards: 1) Hygiene and 2) Safety (as to be defined in government regulations to be issued).

c) Registration: with local Câmara

d) Exclusivity: only those registered ‘local lodgings’ may rent to tourists, either by their owners or through agents.

e) Information sharing: the Câmara must share the Registry with Turismo de Portugal, I. P. (Tourist Board).

f) Classification: local lodging may not use the classification ‘Touristic’ or ‘Tourism’, nor any system of categorisation.

If correctly structured, self-catering accommodation may still be able to fall outside of normal tourist development classifications, being viewed as ‘residential’ rather than ‘commercial’ letting. However, property owners will need to review their situation on a case-by-case basis in order to ensure compliance with the new regulations.

Private consultations can be scheduled at offices in Guia (Albufeira), Lisbon (Chiado) and, starting January 2008, in Funchal (Sé), Madeira. In the Algarve, call 289 561 333, Lisbon at 213 424 210, Madeira at 291 221 095.