ALOJAMENTO LOCAL (AL)

Whether it's an apartment or a house, if you are considering renting out your Algarve property as a vacation home or perhaps just renting out some of the rooms to help cover expenses, converting it into a “local accommodation” could be the best way to generate income.

In this guide, we'll cover the essentials of what you need to know about Alojamento Local (AL), including what qualifies as AL, what changed in 2025, how to register, as well as structural, safety and tax requirements.

What Is Alojamento Local (AL)?

Alojamento Local (AL) is officially defined as an establishment that provides temporary accommodation services to tourists, for a fee, without meeting the requirements to be classified as a tourist enterprise.

If you're listing your property on platforms like Airbnb, Booking.com, or similar, and you're charging for short stays, it likely qualifies as AL and needs to be registered.

2025 Legal Updates for AL

Portugal’s laws for ALs have changed, so here’s what’s new for 2025:

The suspension of new AL registrations in independent units in the form of apartments and lodging establishments is revoked, as well as the validity of registrations for 5 (five) years, the requirement for condominium authorization to operate local lodging in buildings on horizontal property, except in the "hostel" form, the specific rules applicable to seasonal operation (for periods not exceeding 120 days), and the Extraordinary Contribution on Local Lodging (CEAL);

The possibility of changing registration ownership is once again the rule, and limits may be established on the transferability of registrations in containment areas;
Sustainable growth areas are created, where special monitoring and follow-up measures are justified, expanding the legal tools granted to municipalities to accommodate local lodging activities in a sustainable and strategic manner, meeting the specific characteristics of their territories, through specific regulations;

The role of the "local accommodation provider" is created to support municipalities in managing disputes between residents, local accommodation operators, and condominium owners or third-party stakeholders;
The condominium assembly can no longer order the cancellation of local accommodation registrations operated in autonomous units. It may oppose the activity by resolution, which may support a cancellation decision by the municipality or, alternatively, order the parties to reach an agreement, with the supervision of the "local accommodation provider," if applicable;

New deadlines are established for opposing the registration of new establishments: 60 days, or 90 days in the case of requests to operate local accommodation in containment areas;
The expiration date of mandatory insurance, the lack of which or invalidity of which is grounds for cancellation of the registration by the competent municipality, is now published in the RNAL.
The uses of buildings compatible with the operation of local accommodation are clarified in the law.

Registering Your Alojamento Local

Before you apply for an AL license, make sure the property has a valid “Habitation License” (Licença de Utilização) from the local City Hall. Without this, you can’t register, even if everything else is in order.

Documents You’ll Need

Your ID and tax number (NIF/NIPC)

Land registry (Caderneta Predial)
Lease agreement, (if applicable), with authorization for AL
"Use license" or authorization for the property
Proof of business activity (CAE registration)
Written commitment to meet all legal rules
Condo approval (for hostels or new apartments in shared buildings)

Registration Steps

Register or update your business at the Tax Office (Finanças)
Go to the Balcão do Empreendedor (online portal) or your local council’s site
Fill in the notification form
Upload all your documents
Submit and save the receipt

Deadline for communicating changes: 10 days after any change in the communicated data

Processing time can take up to 10 business days (or 20 days for hostels) and an inspection by City Hall may happen up to 30 days later.

Different Types of AL and What They Require

1. Houses

Max: 9 bedrooms, 27 guests (+2 more can sleep in the living room)
Doors/windows must have proper security
Must have ventilation (windows/balconies that open)
Fire extinguisher, fire blanket, and first aid kit required
Emergency number (112) must be displayed
All rooms and equipment must be in good condition

2. Apartments

Max: 9 bedrooms, 27 guests (+2 in the living room)
One owner can’t operate more than 9 AL units in one building, or more than 75% of the building
Needs an AL sign at the entrance
Must have an information and complaints book
Multi-risk insurance required
New ALs in condo buildings need the condominium’s permission

3. Hostels or Lodging Establishments

If you have more beds than rooms (like in dorms), special rules apply:

Dorms need proper light and ventilation
Shared bathrooms must be split by gender (over a certain number of guests)
Each guest should have a locker with a lock
Condominium approval required (if it’s a horizontal property)

For all hostels/lodging establishments:

At least 1 bathroom per 4 rooms or 10 guests
Clean linens and towels between stays
Daily cleaning required

4. Rooms in Your Own Home

Max: 3 bedrooms rented

You must live there while renting
At least one bathroom for every 2 rooms
Breakfast is optional—but you must mention it if offered
Regular cleaning is required

Structural Requirements

Running hot and cold water
Connection to water and sewage systems
Proper lighting
Heating or air conditioning suited to the region
Blinds or curtains to block light
Windows/balconies with outside air access

Bathrooms Must-Haves

At least 1 bathroom per 4 rooms or 10 guests
Hot and cold water
Toilet, sink, and shower/tub required
Bathrooms in dorms need proper privacy (gender-separated or individual units)

furnishings and Equipment

Furniture and appliances suitable for your max guest capacity
Beds at least 1.90m x 0.90m (single) or 1.90m x 1.40m (double)
Towels and sheets for everyone
Closet/storage space
Kitchens in apartments/houses must have fridge, stove, and cooking gear

Safety Requirements

Fire extinguisher
Fire blanket in the kitchen
First aid kit
112 emergency number displayed
Locks/security on entry doors

For larger places (10+ guests), you’ll also need evacuation signage and fire detection systems.

Tax requirements for AL

As an AL owner, you will have the following tax obligations:

Register your business with Finanças before hosting
Issue invoices for all bookings
Submit VAT declarations (if required)
File annual tax returns (IRS or IRC)
Keep proper accounts (if your income is over €200,000/year)
Pay Social Security if applicable

We highly recommend hiring an accountant who is familiar with the AL regulation to assist you and avoid potential mistakes.

How You Can Be Taxed

1. Category B (Business Income): can be simplified (only part of your earnings is taxed) or organized accounting (good if you have high expenses).

2. Category F (Rental Income): you can deduct property expenses, which may work better in certain cases.

Invoicing Rules

Use certified software to issue invoices
Include AL registration number and tourist tax info
Apply correct VAT rate (usually 6% in mainland Portugal)

In sum, renting out your property in the Algarve can be a great way to make the most of your investment, but only if you're fully registered and following the latest regulations. From documentation and insurance to guest safety and taxes, being properly registered makes everything smoother and safer.

Disclaimer

The article has been based on information from turismodeportugal and deemed valid. No rights can be applied to this website or information and is for informational purposes only. Always check ALL information with your local lawyer & accountant