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LOCAL ACCOMMODATION IN PORTUGAL: PRACTICAL GUIDE

With the significant increase in Local Accommodation (LA) in Portugal, people are very tempted to invest in properties for these types of accommodation, and this business is seen as a way to provide extra money at the end of the month. There is, therefore, a need for more knowledge about this area of business, which still raises numerous questions for those who want to start.

What exactly is Local Accommodation? Is there too much to offer? What rules and regulations should I follow? Where can I promote my AL? What taxes do I have to pay? What do I have to do on my property to legalize it? What services and equipment should I offer to the guests?

These and other questions are answered here, in summary, in a Practical Guide that addresses the main rules, guidelines and procedures to be able to move forward with your Local Accommodation.

What is Local Accommodation?

The figure of local accommodation was created by Decree-Law No. 39/2008, of 7 March, to frame the provision of temporary accommodation services, namely to tourists, in establishments that didn't meet the legally required requirements to qualify as tourist developments. In this scope, are included the houses, apartments, lodging establishments and rooms.

Local accommodation: a growing segment

Driven by tourist interest in Portugal and its Autonomous Regions, Local Accommodation is one of the segments with the highest level of growth in our country. In 2018, Portuguese LA units received 4 million guests and 9.3 million overnight stays, which represented 15.6% of national tourist revenues, exceeding 277 million euros. AL also showed a significant increase, compared to the other accommodation segments. In 2019, there were already more than 87 thousand registered local dwellings, with the sector having grown six times, from 14,320 dwellings in 2014.

LOCAL ACCOMMODATION: PRACTICAL GUIDE

1. Offer of Local Accommodation in the city

Before putting your accommodation on the market, do a research and avaliate the existing offer in your city and region. Compare prices, taking into account location, ease of access, size and space conditions. Then consider whether you have a realistic expectation of the price to set. It is important to practice competitive values, but also to bet on an excellent service.

2. Popular platforms

Platforms such as Airbnb, Booking.com, HomeAway and TripAdvisor are the leading websites for booking accommodation. Ads are generally free to post, but a commission is charged. The presence in over 190 countries makes these platforms the research tool chosen by millions of people. The 24-hour service in several languages, together with the offer of accommodation at the best prices, are the main attractions. Your goal on these platforms will be to earn a high rating and get positive reviews.

3. 3. Legislation and general requirements

In the legalization process, it is essential to know the legal regime of local accommodation and be aware of constant updates. You must know the fiscal commitments, bureaucratic procedures and security requirements.

Know what to do:

– Contract multi-risk liability insurance;

– Have an information book, with instructions and rules of the establishment (multilingual);

– Ensure hygiene and cleaning conditions;

– Comply with safety regulations;

– Be equipped with adequate furniture, equipment and utensils;

– Have a complaints book and the AL sign abroad;

– Comply with safety rules against fire hazards. If the accommodation has a capacity of less than 10 people, it will only be necessary an extinguisher and fire blanket, first aid equipment and indication of the emergency number (112).

4. Sign up at Unique Electronic Banc

To start with a local accommodation establishment, it is necessary to register at Unique Electronic Banc. Registration must be done by prior notice with a deadline, and after this mandatory procedure, a registration number will be assigned to be used in advertising and commercial documentation of the establishment.

5. Comply with tax obligations

As for tax obligations, you must start your activity on the Finance Portal. Income obtained through local accommodation is taxed in category B, and you can also opt for category F. If you choose category B, you must start activity in Finance with CAE 55201 or CAE 55204. Homeowners and apartments that provide short-term accommodation services pay 35% income tax under the simplified regime.

You can choose between two forms of taxation:

– The simplified IRS regime (category B), which taxes 35% of income (Finance assumes that 65% of income obtained from local accommodation is spent on charges necessary for the activity).

– Autonomous taxation, which charges a rate of 28% on income, in Category F (rent income). With this option, you can deduct the property's expenses.

Other tax obligations of local accommodation:

– Issuance of receipt-invoices through the Finance Portal;

– Payment of VAT at the rate of 6% (5% in Madeira and 4% in the Azores), through the periodic VAT declaration;

– Delivery of Model 30.

6. Inform Borders Service (SEF)

When opening a local accommodation, you must register with the SEF (Foreigners and Borders Services) and communicate the entry and exit of all non-Portuguese guests. This process can be carried out through the SIBA Platform;

7. Consider all expenses associated with local accommodation

According to an Airbnb survey, 60% of Portuguese hosts said that this form of rental allowed them to live from their homes. However, before investing, it is essential to identify all the expenses inherent to this activity. In addition to tax obligations, multi-risk liability insurance and legal requirements, there are also other expenses you should count on.

Other associated costs:

– Expenses with start-up: acquisition of AL and fire extinguisher plates, complaints book, household items, furniture and appliances, improvement works;

– Expenses associated with each stay: cleaning, laundry, toiletries, check-in support service, travel, among others.

8. Invest in good photographs before advertising local accommodation

Photos are essential to make a good first impression with potential guests. Therefore, make sure they have good quality and resolution, as they can influence customers' decisions.

Tips for having good photographs of the local accommodation:

– Have the space clean and tidy;

– Capture the details that make your space unique;

– Shoot during the day to take advantage of natural light;

– Use image editing programs;

9. Improve customer experience

In addition to the conditions of space, location and ease of access, there are many factors that can contribute to a positive and memorable stay.

Some tips to improve the guest experience:

– Longer check-in (within 24 hours);

– Tourist information, recommendations, useful contacts, local map;

– Welcome Kit with local products;

– WiFi and a fast internet connection;

– Presence of small appliances (hair dryer, coffee machine, etc.);

– Space acclimatization.

10. Always respond to comments and messages

A recent study by BrightLocal revealed that 84% of people trust online reviews and that they value the opinions of other guests more than advertising or commercial information. It is essential to respond to requests for information and guest comments should not be ignored. In response, highlight the positive aspects of the experience and thank the customer for feedback. Positive reviews and recommendations, combined with good photographs, are the best promotion the accommodation can have.

*The data presented here refer to February 2019 and predate the pandemic caused by SARS-CoV-2 and subsequent crisis in the sector.