With Portugal’s popularity soaring among tourists, turning your property into a short-term rental can be a great way to generate income. But the process is regulated, and recent changes have made it more complex—especially in high-demand areas like Lisbon, Porto, and the Algarve.
Here’s a step-by-step guide to getting it right from the start:
🧾 Step 1: Understand the Local AL (Alojamento Local) License Rules
To operate legally as a short-term rental, you’ll need an AL license—and getting one isn’t always straightforward.
- In many Lisbon and Porto neighborhoods, new AL licenses are restricted or suspended altogether due to overtourism and housing shortages.
- Rules vary by municipality, so it’s critical to check with a local attorney or municipal office before assuming your property qualifies.
- AL licenses are no longer transferable with the sale of a property, meaning even if the previous owner had one, you’ll need to apply again from scratch.
⚠️ Pro tip: If you’re buying with the intention of using the property as a short-term rental, confirm zoning eligibility and licensing options in writing before you close.
💰 Step 2: Register Your Rental Activity with Finanças
Once licensed, you must register your rental activity with the Portuguese Tax Authority (Finanças):
- All rental income must be declared—even if you manage it from abroad.
- Depending on your residency and tax status, you may be eligible for NHR (Non-Habitual Resident) benefits, which can reduce tax liability on certain types of foreign income. However, short-term rental income is typically taxed in Portugal.
- You’ll need a Portuguese bank account and NIF to comply.
🧹 Step 3: Set Up Local Property Management
Running an STR from abroad? You’ll need boots on the ground. Reliable management can make or break your rental success.
Key services to line up:
- Professional cleaning between guest stays
- Guest check-ins/check-outs (many municipalities require in-person ID verification)
- Booking coordination and guest communication
- Emergency support and basic maintenance
Many international owners work with local STR management firms who handle everything for a percentage of rental income.
🌍 Step 4: Optimize for the Tourist Market
Portugal’s rental market is competitive—especially in hotspots. To stand out:
- Invest in high-quality listing photos
- Offer fast, reliable Wi-Fi (a must for digital nomads)
- Create multilingual listings on Airbnb, Booking.com, etc.
- Use dynamic pricing tools to stay competitive
- Include thoughtful extras: welcome guide, coffee, beach gear, local tips
✅ Conclusion: Plan Smart, Earn Smart
Portugal’s STR market is still thriving—but success depends on doing it by the book. Licensing, legal compliance, and property management are essential if you want to avoid fines and maximize your ROI.
Not sure where to start? We work with trusted local attorneys, tax experts, and STR managers who can help you launch (and scale) a legal, profitable rental—without the stress.