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New Rules For Local Accommodation

The main changes to this segment include the suspension of the issuance of new licenses; the role of municipalities, as well as condominium owners; and also, for the revalidation of current licenses and the creation of the Extraordinary Contribution on Local Accommodation (ECLA [CEAL]) rate.

Local Accommodation without new licenses

This package determines the suspension of the issuance of new Local Accommodation licenses. This suspension covers apartments and also rooms, i.e., accommodation establishments integrated in an autonomous fraction of a building.

Aimed essentially at restricting permits in coastal areas and in the entire Algarve region, it should be noted that this measure does not affect the Autonomous Regions, nor the 165 municipalities on the mainland classified as low density. There are also 73 low-density parishes, although they belong to 20 municipalities with high population density.

Revalidation and expiry of licenses

Regarding the licenses currently in force, it should be noted that they remain valid and will be reviewed during the year 2030. These licenses can be renewed for five years.

But beware, there is an exception: if you have bought a house for Local Accommodation using housing credit (until 16 February 2023), the license will be renewed in 2030 and will follow the contracted time of the credit.

On the other hand, if you have an unused Local Accommodation, but do not want to see the license canceled, you now have to submit the income statement with the Local Accommodation within two months following the entry into force of the law.

Licenses also expire in situations of transfer of the property, except in situations of succession.

Municipal Housing Charter

Each municipality, which is responsible for issuing Local Accommodation licenses, must draw up its Municipal Housing Charter. This charter aims to achieve a balance between housing, Local Accommodation, student accommodation, commerce, industry and other activities. If it is found that there is a shortage of housing, no new permits can be issued.

Local Accommodation with new rate

An Extraordinary Contribution on Local Accommodation (ECLA [CEAL]) will be created. This rate, set at 15%, only applies to apartments and cannot be deducted from the determination of taxable income in IRC.

(ECLA [CEAL]) does not apply to properties located in the interior of the country.

In the light of the new law, the condominium assembly, by resolution of at least two-thirds of the building's permillage, may oppose the exercise of local accommodation activity in an autonomous fraction of a building or part of an urban building (independent use).

The assembly may only not oppose if in the constitutive title (document made by public deed that attests that the building meets all the requirements to integrate the horizontal property regime) if the use of the fraction for local accommodation purposes is foreseen or if there is already a previous resolution of this assembly authorizing the use of the fraction for this purpose.

If the decision is to cancel a registration of the Local Accommodation, the meeting of condominium owners must inform the mayor of its resolution, taking effect within 60 days after sending the resolution.

Note, the cancellation of the registration determines the immediate cessation of the operation of the Local Accommodation.

Incentive to the transition from Local Accommodation to rent

Those who remove the houses from Local Accommodation (registered until December 31, 2022) by the end of 2024 and transition to a housing rental regime, will be exempt from IRS or IRC on rents until the end of 2029.

It is also important to note that these cases are not subject to any limit on the amount of the rent, and the lease agreement must be carried out, and be registered with the Finances, by December 31, 2024.

All this information is subject to confirmation after the approval of the State Budget for 2024, which will take place on November 29, 2023.

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