Simplified Tax Regime for Holiday Letting

Holiday property owned and let on a short term basis is usually best directly owned by an individual. Portugal has a tax regime where the taxpayer may opt to be taxed on a simplified regime if the turnover is less than €200,000. In this regime, 15% of the gross takings (85% of takings is assumed as costs of running the business) is included in the taxpayer’s tax return (without deduction of any expenses) which is then subject to the taxpayer’s marginal rate as applicable. There are certain licensing requirements for the property to be let on a short term basis. Foreign owners may also make use of this scheme.

Tax Obligation for Property Owners Letting Property in Portugal

Many property owners in Portugal make their properties available for short term lets without being registered with their local authority or reporting this income in Portugal. They are in effect leaving themselves liable for severe penalties should they be found out. There is a widespread belief that they are only liable for taxation in their home countries where in fact this is not so. Owners should be aware that local tax authorities are also able to crawl internet sites as any other potential client.