Portugal Short-Term Rentals 2026: Contention Zones, Sale Cancellation and Tax

What Alojamento Local is in Portugal

Alojamento Local (AL) is the legal framework that governs short-stay accommodation in Portugal, typically 1 night to 30 days per booking. The legal base is Decree-Law 128/2014 ^[1], covering eligible property types, mandatory registration in the RNAL (National Short-Term Rental Registry), safety requirements, operations and taxation.

In 2026, the AL regime matters most for owners selling property in central urban zones with an active registration, or for investors evaluating an acquisition with AL history. The rules changed materially in 2023-2024 and there are critical points that directly affect property value. Missing them can compromise thousands of euros in the transaction.

Contention zones: where they exist and what they mean

Contention areas are zones where AL registrations reached a cap set by the municipality based on pressure on the residential housing stock. In these zones, new AL registrations are suspended and existing ones face special transfer rules. In Portugal, three cities have declared contention areas in force in 2026:

Lisbon

• Alfama (Santa Maria Maior)
• Mouraria
• Castelo de São Jorge
• Bairro Alto and Madragoa
• Misericórdia (significant portion)
• Some specific Santa Catarina and São Mamede zones

Porto

• UNESCO-listed historic centre
• Cedofeita (western part)
• Sé, Vitória and Miragaia

Funchal (Madeira)

• Funchal historic centre
• Waterfront area

Other mainland Portuguese municipalities may declare their own contention areas. Always check the latest municipal regulation before buying or selling. Cascais, Albufeira and Setúbal, for example, have specific regimes with restrictive areas but are not officially classified as "contention" under DL 128/2014.

DL 76/2024: what changed versus Law 56/2023

Law 56/2023 (Mais Habitação) introduced restrictive AL measures (nationwide suspension of new registrations, automatic licence cancellation in pressure zones, and an extraordinary contribution) that drew widespread sector pushback. DL 76/2024 ^[2] revoked several of those measures, restoring most of the original DL 128/2014 regime with some changes:

• Nationwide suspension of new AL registrations: REVOKED. New registrations resume outside contention areas.
• Generic automatic licence expiry: REVOKED. Expiry now applies only in specific cases (see next section).
• Extraordinary AL contribution: REVOKED. The ordinary AL contribution under DL 128/2014 remains.
• Pre-existing contention areas: KEPT. Those declared by municipalities before Law 56/2023 stay in force (Lisbon, Porto, Funchal).

Practical effect: investors can register AL again in non-contention zones, but the main historic cities continue with restrictions and selling in a contention zone still triggers special rules.

Automatic AL licence cancellation on sale

This is the most critical rule for AL sellers and the one with the biggest price impact. In contention zones, the sale of the property triggers automatic cancellation of the AL licence. The new owner does NOT inherit the registration. They must apply for a new one, which may be denied because the zone is in contention ^[1].

Outside contention zones, the AL licence can be transferred to the new owner if both parties meet the administrative transfer requirements. Transfer is not automatic: it requires notification to Turismo de Portugal and acceptance by the acquirer.

Implications for the seller in a contention zone

1. The investor buyer knows they will not inherit the licence. The price they pay reflects that (discount of 15-30 % versus equivalent property outside contention, depending on location and historical AL yield).
2. To preserve value, prepare a full AL dossier: revenue from the past 12-24 months, monthly occupancy rate, operating expenses, ratings on platforms (Booking, Airbnb).
3. The dossier serves not to guarantee AL continuity but to demonstrate potential for alternative uses (medium-term rental, premium primary residence).
4. In some cases, it's worth marketing the property to residential buyers too. They may pay a similar price to an investor without depending on AL.

AL taxation: Cat. F vs Cat. B

AL income is taxed under IRS in one of two alternative regimes, each with different logic. The choice has a material impact on net IRS. Worth consulting an accountant to simulate both.

For most AL operations with services (Booking/Airbnb with professional cleaning), Category B in simplified regime is the applicable and most tax-efficient regime. There are cases where Category F comes out better — particularly passive AL with high real expenses and no complementary services. Simulating both regimes is worth an accountant hour.

Other obligations: CAE, RNAL, AL contribution

1. Business-activity registration with AT under CAE 55203 (tourist apartments) or similar.
2. Registration in RNAL via the entrepreneur's desk (balcão do empreendedor) or Turismo de Portugal portal.
3. Reporting to SEF (foreigners and borders) of foreign guest stays, within 3 days.
4. Annual AL contribution to the municipality (variable rate per municipality, €40-€100/year).
5. INE reporting of occupancy statistics (mandatory for some categories).
6. Compliance with safety requirements: extinguishers, smoke detectors, first-aid kit, evacuation instructions.

Missing any of these elements can lead to AL registration suspension and significant fines. Turismo de Portugal and ASAE inspections intensified in recent years.

Since 2024, under Law 14/2024 (transposing EU Directive DAC 7), booking platforms (Airbnb, Booking, Vrbo, Expedia, among others) automatically report host data to the Portuguese Tax Authority: name, NIF, quarterly receipts, number of nights and average price per booking ^[3]. Undeclared AL income is now detected automatically, with no physical inspection needed. Hiding AL revenue ceased to be a viable option in 2026.

Condominium approval and mandatory liability insurance

Two requirements have weighed on AL acquisition and operation decisions through 2025-2026 and deserve focused attention: condominium approval in horizontal-property buildings, and mandatory liability insurance.

Condominium approval in apartment buildings

To register AL in an autonomous flat within a horizontal-property building, Law 56/2023 introduced (and DL 76/2024 partly kept) the requirement of a favourable resolution by co-owners representing at least two-thirds of the building's capital, unless the constitutive title of horizontal property already expressly provides for AL use. The rule protects other co-owners from non-consented impacts (noise, traffic, security) and has been increasingly enforced by building administrators.

Practical implication for investors: before buying a flat in a building with AL intent, require from the seller a copy of the assembly minutes specifically authorising AL on that flat, or a clause of the constitutive title that permits it. Without this document, AL registration may be rejected or suspended after a co-owner complaint. In small buildings (up to 4 flats), approval is feasible by direct contact; in large buildings (>10 flats) with residential tenants, it is frequently blocked.

Mandatory liability insurance

DL 128/2014, in article 13.º-A, requires the AL registration holder to take out a liability insurance contract covering personal and material damage to guests and third parties ^[1]. The insurance must cover a minimum value defined by ordinance (€75,000-€100,000 per year and per claim). Market cost: €60-€200/year for a standard flat, varying by size, capacity and location. The policy must be active throughout the operation. An expired policy equals operating uninsured, with risk of fines and registration suspension.

IMI majorado in some zones

Some municipalities apply majorated IMI (a higher annual property tax) to properties exploited as AL, above the standard residential rate. In Lisbon, for example, some buildings in contention zones pay higher IMI if classified as AL operations versus standard residential use ^[1]. Check the municipal regulation before acquisition.

AL vs long-term rental: when each makes sense

The choice between AL and long-term rental depends on yield, management effort, and tax framework. In 2026, with stricter rules in historic centres and Cat. F vs Cat. B taxation on the table, the calculation is less obvious than 5 years ago.

AL implies continuous operational effort. For passive investors, long-term rental can give net yield close to AL with 1/10 of the time invested. In contention zones, existing AL value is capped by the ban on new registrations — converting to a premium primary residence or medium-term rental may make sense. For long-term regime detail see the NRAU 2026 guide.

AL licence renewal: 5-year term

AL registrations issued after Law 56/2023 have a 5-year validity, renewable. Before Law 56/2023, registrations were indefinite. In 2026, this rule still applies even after DL 76/2024. The 5-year validity applies to new registrations.

For older registrations (pre-2023), confirm with the municipality whether they keep their indefinite-validity regime or were automatically converted to 5 years. This check is essential before buying an AL with an "old" licence still in force.

Common mistakes that cost money

1. Selling AL in a contention zone to an investor without disclosing the automatic cancellation. The investor discovers it after the deed and may file a claim.
2. Operating AL without a registered CAE with AT. Qualifies as undeclared exploitation and exposes you to fines + retroactive IRS reassessment.
3. Choosing Cat. F without realising that with services it's Cat. B. Risk of inspection and reclassification.
4. Forgetting SEF reporting of foreign guests. Significant per-guest fines.
5. Not registering in RNAL. Operating without registration is illegal and Turismo de Portugal can immediately shut down operations.
6. On 5-year renewal, delaying the municipal notice. The licence can lapse without notice.
7. Applying outdated Law 56/2023 rules (nationwide suspension, extraordinary contribution). REVOKED by DL 76/2024.

Before the decision: three practical steps

If you're considering buying or selling AL in 2026, do three things: (1) check the exact location against the latest municipal contention regulation; (2) consult an accountant to simulate Cat. F vs Cat. B for your case; (3) prepare a revenue/expense dossier if you're selling. For city-level market context, complement with the Lisbon real estate guide, the Porto guide and the Faro guide. All cover AL in the specific local context.

This article was written with AI assistance and reviewed editorially by The Agent Trust. All cited sources are official and verifiable in the links above.