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Rental income tax in Portugal
This is a vast area and that is why we have created this page dedicated to taxes on rental income in Portugal. It is indeed necessary to know that during the high season, there are a lot of tourists and that seasonal rentals are rented in some places like Cascais at a golden price.
It is a very interesting project that can bring in a lot of money in a short period of time but it is essential to know before starting, what will be the taxes and duties on this type of rental investment in Lisbon or elsewhere. They can indeed vary according to your status as a Portuguese resident or not, according to the type of rental contract of your property (Furnished or not) or whether it is for short or long rental periods.
For more ease in the setting up of these declarations, we can have you accompanied by a english-Portuguese accountant in whom you will be able to have all confidence, contact us!
Individual not resident in Portugal
Rental of a Portuguese building
If you are a natural person not resident in Portugal and you are renting under a furnished or unfurnished rental contract, the tax rate is 25%. This tax base is based on the rents you will receive, from which are deducted the property tax and the maintenance costs of the building. Please note that interest and depreciation are not deductible from this tax base. The declaration of your income must be made in May of each year (Income Tax Return Mode 3- Schedule F).
Furnished tourist accommodation for rent in Portugal
In this case, you will only be subject to VAT if your turnover is over €10,000. However, it is advisable to consult a competent accountant as it is quite possible to adopt a simplified income tax calculation system if your turnover from seasonal rentals does not exceed €200,000 per year.
A non Portuguese resident will be taxed here at 25% for a tax base of 35% of the turnover. This amounts to an overall tax of approximately 8.75% of your turnover.
Your tax declaration is made before starting your economic activity of operating furnished accommodation for tourists, then in May of each year (Declaration mode3, appendix B). It is important to note that you will also have to declare your income in your country of residence.
Individual resident in Portugal
Taxes on income from a Portuguese property
If you are a Portuguese resident and decide to rent out one of your properties in Portugal, whether furnished or not, you will be taxed at 28% (tax rate that does not vary according to household income for tax purposes). The basis of taxation is the rents received, net of maintenance costs and property tax (interest and depreciation are again non-deductible).
Rental of furnished apartments for tourists
You will only be subject to VAT if your turnover exceeds €10,000. As for a non-resident person, Portuguese residents can adopt a simplified income tax calculation regime if your turnover is less than €200,000 per year.
Taxation on this type of rental of real estate in Portugal by a resident is between 14.5% and 48% on the basis of 35% of turnover. Do not forget if you wish to define at the beginning of the year to be taxed on the effective result, option to be defined.
The tax declaration is made before the start of the activity, then in May of each year via the mode 3 declaration, appendix B.
Legal person resident in Portugal
Taxes on income from a Portuguese property
In this case and whether the property is rented furnished or not, the tax rate is 21% plus a possible municipal tax of up to 1.5%. Taxation is based on the net accounting result, with the possibility of deducting interest and depreciation.
The declaration of taxes on the renting of buildings is also made before the start of the activity, then in May of the following year, via the declaration mod 22.
Rental of furnished apartments for tourists
If you buy an apartment in Portugal on behalf of a company, to rent it to tourists, your activity will be subject to VAT at the rate of 6%. It is also possible here to adopt a simplified income tax calculation regime if your turnover does not exceed €200,000 per year and your total assets do not exceed €500,000 per year.
The tax rate is 21% (excluding municipal tax) and the tax base if the simplified scheme is opted for is 4% of turnover for a hotel activity. You can also choose here at the beginning of the year to be taxed on the actual result.
Some additional information on real estate in Lisbon or elsewhere in Portugal :
- Taxes and duties on real estate purchases in Portugal
- Taxation in Portugal
- The real estate market in Portugal
- Buying a Portuguese second home
Do not hesitate to contact me if you wish to be accompanied in your purchase of an apartment in Lisbon: identification of your criteria, contact of the various estate agencies on the spot, realization of photos to visualize the selection, accompaniment with the visits and help with the conclusion of the contract under the best conditions.
English-speaking accountant in Portugal
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