Boom in unregulated lettings promotes widespread tax evasion

Portugal’s Tax Authority continues to ignore the revenue opportunities in the short-term rental, 'Alojamento Local,' market with those in charge of regulating the tourism sector continuing to pass the buck.

In the autumn of 2015, the new Secretary of State for Tourism, Ana Mendes Godinho inherited the unenviable task of trying to make the Alojamento Scheme work in the face of massive opposition from property owners who simply found it easier to ignore the new legislation than to comply.

Godinho agreed that the Alojamento Local scheme proved to be seriously flawed after its launch in Faro in April, 2015 by the then Secretary of State for Tourism, Adolfo Mesquita Nunes.

Godinho has failed to address the registration problems, let alone the current boom in illegal rentals with a high percentage of those involved failing to pay taxes on their rental income.

News today that Airbnb, the short-term bookings site, substantially has increased its business in Portugal in the past year leaves the Portuguese authorities with their pants around their ankles as the majority of these bookings have been in properties that are not AL registered and owners may not be rushing to volunteer to pay tax on the often substantial rental incomes earned.

About 705,000 visitors this year have booked rooms or homes in Portugal during the summer months using Airbnb. This is an steep increase of 76% over the same period 2015.
 
According to Airbnb data, for the months of June, July and August, 657,000 of these guests were foreigners, from countries such as France (164,300), Spain (70,000), United Kingdom (52,400), Germany (46,300) and United States (35,500).

These visitors stayed an average of 4.6 nights which is ahead of the European average of 4.3 nights per stay.

According to the company, the top destination in Portugal was Lisbon, which now is the "fourth most requested European city" on Airbnb, behind Barcelona, ​​Paris and London.

Of the total number of short-term renters, only 48,200 were Portuguese, who chose Lisbon (8,800), Lagos (5,500), Faro (5,000), Porto (4,600) and Tavira (3,600).

"Domestic tourism doubled over the same period last year", says Airbnb, while those property owners signing up for Alojamento Local registration has stagnated with less than 20% of the total estimated number of rental properties in the country being registered correctly.

In 2016, Airbnb began collecting and remitting tourist taxes from Airbnb guests on behalf of property owners in Lisbon after Airbnb and the City of Lisbon signed an agreement to promote responsible home sharing and to simplify the payment of tourist taxes.

Bizarrely, 80% of these properties in Lisbon used by Airbnb guests were not registered under the AL scheme.

Barcelona’s council has taken a rather different approach to tax income slipping from its grasp and has demanded fines of €30,000 each from TripAdvisor and eight other accommodation sites over illegal holiday property rentals, a move that Portuguese authorities seem loathe to make.

In July and August, the Spanish city ordered the closure of 615 rental properties that were being offered without licences.

While the government keeps doing the same old thing, looking at hotel occupancy levels and patting itself on the back for this year’s increase in tourism and income, the short-term rental sector is zipping ahead while deftly avoiding both registration and tax obligations.

The mood in the sector is – ‘when it comes to the AL laws, if no one is looking, why bother with registration?’

__________
 
The National Association of Local Lodging Establishments has as its mission to provide essential information and support regarding Local Lodging; enhance security for holidaymakers and owner/operators; strengthen compliance and be a collective voice, representing all of those engaged in Local Lodging in Portugal.

For further information, see:
www.nalle.pt

You must be a registered user to make comments.
Please register here to post your comments.