1. Background
Law No. 56/2023 created an extraordinary contribution on local accommodation apartments (CEAL), levied not only on apartments but also on guesthouse establishments located in an autonomous unit of a building operated as local accommodation (AL).
2. Who is liable
- CEAL is payable by the operators of local accommodation establishments;
- The owners of the buildings in which the local accommodation activity takes place (who are not the operators) are also secondarily liable for payment of the contribution, i.e. if the operator does not pay it.
3. What is taxed
- CEAL is levied on units (apartments, etc.) in buildings/properties used for residential purposes in which a local accommodation establishment is operated on 31 December of each calendar year;
- Properties located in the interior of the country are excluded from CEAL, as are properties located in parishes that meet the following criteria:
- They are covered by a Municipal Housing Charter in force that shows an adequate balance between the supply of housing and student accommodation in the municipality;
- They belong to municipalities in which a housing shortage has not been declared; and
- No part of their territory is an area of urban pressure.
4. Applicable rate and tax base
- The applicable CEAL rate is 15%;
- The tax base results from applying the local accommodation economic coefficient and the urban pressure coefficient to the gross private area of the residential properties;
- The coefficients are published annually by Ministerial Order (Portaria).
5. Exemption
- Residential properties that are not autonomous units (i.e. parts of a building or group of buildings that can be exclusively owned by one person or entity and sold independently of the other units and common areas of the condominium, such as apartments, garages, shops, etc.) or parts or divisions capable of independent use are exempt from CEAL;
- Local accommodation units in the owner’s primary and permanent residence are also exempt, provided they are not operated for more than 120 days a year.
6. Not deductible for corporate income tax (IRC) purposes
- CEAL is not deductible in determining taxable profit for IRC purposes, even when recorded as an expense for the tax period.
7. Incentive for long-term letting
- An exemption from IRS or IRC (as applicable) is granted on rents received until the end of 2029, with no cap on the rent charged, for owners of properties withdrawn from AL activity by the end of 2024 in order to allocate them to residential letting;
- This incentive applies to properties with an effective Local Accommodation registration by 31 December 2022;
- Finally, it should be noted that the leases to be entered into must be signed and registered with the Tax Authority by 31 December 2024.
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