IRS on Alojamento Local in Portugal in 2026: category B, simplified regime and coefficients

Updated: 10 November 2026

If you run an Alojamento Local (AL) in the Algarve, you declare it in your Portuguese IRS return every year, and the question is always the same: how much of what I earn is taxed? We read articles 28 and 31 of the IRS Code as published on the Portal das Finanças, the tax authority's FAQ and AL leaflet, two binding rulings and Law 56/2023 («Mais Habitação»). Links are at the end. Where we could not confirm something, we say so. This is not tax advice: for your own case, ask your certified accountant.

The short answer

In November 2026, according to the IRS Code published on the Portal das Finanças:

Running an AL produces business income under category B of IRS.
Under the simplified regime, taxable income from an AL house or apartment is 35% of what you receive (coefficient 0.35, art. 31(1)(c)).
If the house or apartment is in a containment area (área de contenção), the coefficient is 0.50 (art. 31(1)(h)).
An estabelecimento de hospedagem falls under the 0.15 for hotel and similar activities (art. 31(1)(a)).
Holders of a house or apartment AL may opt, year by year, for the category F rules (art. 28(14)).
The resulting income is aggregated and taxed at the general IRS rates (art. 31(3)).

The coefficients, one by one

IRS Code, art. 31(1) (latest amendment shown on the page: DL 49/2025):

0.15: sales, food and drink, and hotel and similar activities, except AL run as a house (moradia) or apartment.
0.35: service income not covered by the other letters. Because AL houses and apartments are excluded from 0.15, they fall here; the tax authority's AL leaflet says so expressly.
0.50: AL houses or apartments located in a containment area (letter added by Law 2/2020, the 2020 State Budget).
0.95: net capital gains and other increases in wealth.
0.10: operating subsidies and other category B income not listed.
The «quartos» type (rooms in your home): the law only excludes houses and apartments from 0.15 and the leaflet only mentions hospedagem. We found no official text stating which coefficient applies to quartos; check with your accountant.
A simple example: 30,000 euros of AL income from an apartment outside a containment area gives 10,500 euros of taxable income (before the 15% rule below).

The 15% expenses rule

Art. 31(13) (added by Law 114/2017):

It applies to the coefficients in letters (b) and (c), so also to AL at 0.35. On its wording, it does not apply to 0.50 or 0.15.
If 15% of your income is higher than the total of certain expenses reported to the tax authority, the difference is added to your taxable income.
Among the expenses that count: staff costs, rent for business premises, other invoiced expenses (supplies, electricity, water, communications, insurance, travel) and, for AL property you own or hold in usufruct or surface right, 4% of its taxable property value (VPT, letter (d)).
Mixed personal and business expenses count at 25% (no. 14).
By the end of February of the following year, flag your business invoices and the property used for the AL on the Portal das Finanças (no. 15). You can also enter the figures in your return (no. 16), but you must be able to prove them.

Simplified regime or full accounts

IRS Code, art. 28:

You stay in the simplified regime if your category B income did not exceed 200,000 euros in the previous year (no. 2).
You can opt for organised accounts when you register the activity or by the end of March of the year you want to switch (nos. 3 and 4).
The simplified regime ends if 200,000 euros is exceeded in two consecutive years or, in a single year, by more than 25% (no. 6).
Before you start, file the start-of-activity return (início de atividade); the AT leaflet lists activity codes CAE 55201 and 55204.

The category F option

Art. 28(14) (added by Law 42/2016):

Holders of income from running an AL house or apartment «may, each year, opt to be taxed under the rules for category F» (rental income).
It is only for houses and apartments, not for hospedagem or quartos.
According to the Portal's FAQ, with this option the income keeps its category B classification, and category F expenses must be backed by documents.
It can pay off when real costs (condominium fees, IMI property tax, works, maintenance) are high compared with income. We did not confirm in an official source the rate applied to AL under this option; ask your accountant for a simulation before you file.
The 25% flat rate that Law 56/2023 set in art. 72 is for residential lettings; do not apply it to AL without confirmation.

Capital gains and leaving AL

A property that was used for AL and is sold within three years of returning to your private assets: the gain is category G but taxed under category B rules (IRS Code art. 10(16), according to binding ruling 26828 of 2024).
In that case the capital gains exclusion of art. 50 of Law 56/2023 (sales between 1 January 2022 and 31 December 2024 used to pay off a home loan) did not apply, the same ruling says.
The rules on assigning property to a business changed with the 2021 State Budget (Law 75-B/2020), with a transitional regime in its art. 369. Binding ruling 28854 of January 2026 shows that a later sale may qualify for the reinvestment relief for a main home (art. 10(5)) if the conditions are met. Each case depends on dates and past options: go through it with your accountant.
Switching from AL to a residential lease: art. 74-A of the Tax Benefits Statute (EBF, added by Law 56/2023) exempts the rent until 31 December 2029, but only for AL registered and in use by 31 December 2022 with the lease registered on the Portal by 31 December 2024. For new leases, that deadline has passed.

What has changed since «Mais Habitação»

Law 56/2023 amended arts. 10, 41 and 72 of the IRS Code, not art. 31: the AL coefficients stayed as they were.
The CEAL, the extraordinary AL levy created by the same law, has been repealed (DL 57/2024): see our guide /portugal-local-accommodation-2026-ceal-insurance.
DL 76/2024 changed the AL regime (registration, transfer), not these IRS articles.
2026 State Budget (Law 73-A/2025): we found no change to arts. 28 and 31; the official pages for those articles show no later amendment. It did update the general IRS brackets.
Containment areas are set by each municipality. Ask yours in the Algarve whether your AL is in one, because it moves the coefficient from 0.35 to 0.50.

Other tax obligations

Invoicing: see our guide /portugal-invoicing-local-accommodation-hotel-certified-software-atcud-2026.
VAT on accommodation and the art. 53 exemption: see our guide /vat-hotel-night-holiday-rental-rates-2026.
Platforms report your income to the tax authority (DAC7): see our guide /dac7-booking-airbnb-report-host-income-tax-authority-2026.

How iQuota helps

We list your property in AI assistants with direct booking, payment at the property and no commission, with your real prices of the day. Lower commissions do not change the coefficient, but they change what you keep.

Want an official booking page AI can read and a connector with your real prices and availability, commission-free? The first 30 hotels join free until 30 June 2027.

See the Founding Hotels programme

Frequently asked questions

What is the IRS coefficient for Alojamento Local in 2026?

Under the simplified regime, 0.35 for an AL house or apartment, 0.50 if it is in a containment area and 0.15 for an estabelecimento de hospedagem (IRS Code, art. 31(1)). The 15% expenses rule (no. 13) also applies to the 0.35.

Can I declare my AL under category F?

Yes, if it is a house or apartment: art. 28(14) lets you opt, each year, for the category F rules. The income is still classified as category B and expenses must be documented.

When do I need organised accounts?

When your category B income exceeds 200,000 euros in two consecutive years, or by more than 25% in a single year (art. 28(2) and (6)). Before that you can opt for them by the end of March.

Sources

More guides for hotels

More guides for hotels →

Português