How do the New VAT Rules Impact my AL

How do the New VAT Rules Impact My AL?

Will my Airbnb / AL in Portugal need to charge VAT next year?

(and what to do before 30 July 2025)

Short answer: yes if you live outside the EU; maybe if you live inside it.
The new rules kick-in on 1 July 2025 and come from Decree-Law 35/2025, clarified by the OCC Practical Guide released in July 2025.

1. Why is this happening?

Until now, many short-term-rental (“AL”) hosts relied on Portugal’s small-business VAT exemption (article 53 CIVA). The reform narrows that exemption:

Non-EU residents (e.g. UK, US, Brazil) lose the right to stay exempt. They must enter the normal VAT regime from 1 July 2025.
EU residents can still be exempt, but only via the cross-border variant of the regime. That means either switching to the normal Portuguese regime or closing the Portuguese VAT registration and claiming the exemption through their home tax office.

2. Which scenario are you in?

Your tax residence	VAT position from 1 July 2025	Key actions before 30 July 2025
Outside the EU – e.g. UK, USA, Switzerland	Must register/convert to the normal Portuguese VAT regime. Exemption ends automatically	1. File a Declaration of Alterações choosing the normal regime. 2. Start issuing VAT invoices for every stay from 1 July. 3. Arrange periodic VAT returns (usually quarterly) and, if you live outside the EU, appoint a fiscal representative.
Inside the EU – e.g. Spain, Germany	Two options: A) Join the Portuguese normal regime (same steps as above); B) Keep the exemption via the trans-frontier regime. This requires closing the Portuguese VAT number and handling VAT in your home state	Option A: file Declaration of Alterações. Option B: file a Declaration of Cessação dated 30 June 2025 and notify your own tax authority; obtain an “EX”-suffixed VAT ID for cross-border reporting.

3. What changes on your invoices and returns?

Topic	Normal Portuguese regime	Cross-border exemption (EU only)
Invoices to guests	Must show Portuguese VAT (6 % mainland/ 5 % Madeira / 4 % Azores for pure accommodation; 13 %/9 %/5 % if breakfast included; 23 %/22 %/16 % on optional extras).	No Portuguese invoice required; you invoice under your home-country rules and do not SAF-T-report in Portugal.
Right to deduct input VAT	Yes—from 1 July you may reclaim VAT on renovation, utilities, cleaning, etc.	Still no deduction inside Portugal.
Periodic filings	Standard Portuguese VAT return; payment due by the 20th or 25th of the second month following the period	New Quarterly SME Declaration filed in your home state; Portugal relies on that data.
Tourist tax (‘taxa turística’	Remains a municipal obligation; include it on the VAT invoice.	You still owe the tax but ask each municipality how to pay, because no Portuguese invoice is issued.

4. 2025 compliance timeline for AL hosts

Date	What to Do
By 30 June 2025	Finish the last exempt period. Review contracts and booking-engine pricing to add VAT where needed.
By 1 July 2025	Begin charging VAT (non-EU hosts, or EU hosts who opt into the normal regime)
By 30 July 2025	• Non-EU & EU hosts choosing the cross-border route: file Declaration of Cessação stating 30 June as the end date. • EU hosts staying in Portugal’s normal regime: ensure the Declaration of Alterações has been submitted.
October 2025	First Portuguese VAT return due (for Q3) if you entered the normal regime.
31 January 2026	First SME quarterly return due in your home state if you picked the cross-border exemption.

5. Practical checklist

Map your bookings: identify stays that occur on or after 1 July 2025—those will bear VAT if you fall under the normal regime.
Update pricing on Airbnb, Booking.com, VRBO to display VAT-inclusive rates from that date.
Choose accounting software that can issue Portuguese-compliant invoices with the correct VAT codes.
Budget for cash-flow impact: you will collect VAT but also recover input VAT on expenses such as renovation works.
Talk to an English-Speaking Accountant in Portugal early: registration, fiscal-representation contracts and bookkeeping set-up can take several weeks.

FAQ

Do I need to re-register my AL licence?

No, the AL licence (Registo N.º) is separate from VAT status.

Can I keep taking bookings today for next year’s dates?

Yes, but the tax point is when the stay occurs. Nights after 30 June 2025 will fall under the new VAT rules.

What if I simply ignore the change?

The tax authority will automatically switch you to the normal regime and may assess VAT, interest and penalties back to 1 July 2025.

Need Help?

Our firm specialises in assisting foreign AL owners. Our English Speaking Accountants can:

Register/convert your VAT status,
Set up compliant invoicing,
File returns (or the cessation notice) on your behalf, and
Optimise input-VAT recovery on refurbishments.

This article is based solely on the OCC “Guia Prático – Regime Especial de Isenção do IVA” (July 2025). Always confirm your specific circumstances with a qualified advisor before acting.