Law No. 56/2023 of October 6 established the Extraordinary Local Accommodation Tax (CEAL), regulated by Decree No. 455-E/2023 of December 29, as part of the «Mais-Habitação» program.

The Special Local Hosting Fee (CEAL)

Law No. 56/2023 On October 6, the council approved various measures to promote housing, establishing the Extraordinary Local Housing Tax (hereinafter referred to as «CEAL») with the aim of taxing the use of real estate for housing purposes as “Local Accommodation,” in order to mitigate the negative externalities felt in the housing market and their social cost.

In fact, Decree No. 455-E/2023 of December 29 (hereinafter «the Decree») regulates and defines the urban development coefficient, which, along with the economic coefficient, is one of the parameters to be taken into account when applying this levy.

Accordingly, the Decree establishes the urban development pressure coefficients for each locality falling within its scope of application and also provides for the exchange of the list of taxpayers between Turismo de Portugal, I.P., and the Tax and Customs Administration.

Scope of Application

The CEAL pertains to the designation of residential real estate as “Local Housing,” including, for this purpose, self-contained units and portions or divisions of urban real estate that can be used independently for residential purposes (and are duly authorized for such use).

However, due to the extraordinary nature of this levy—which is intended to mitigate the negative externality of the housing shortage—it does not apply to real estate located in inland regions (as identified under Decree No. 208/2017 of July 13), nor to real estate located in areas with a balanced housing market (that is, meeting the criteria set forth in Law No. 56/2023 of October 6).

Also exempt are real estate properties that do not constitute independent units, parts, or divisions capable of independent use, as well as local lodging units within a primary residence that are operated for no more than 120 days per year.

With regard to the subjective scope of application, the Decree introduces the requirement to submit a list of taxpayers (holders of operating licenses for Local Accommodation establishments and, alternatively, property owners who do not hold an operating license) and valid Local Accommodation licenses between Turismo de Portugal, I.P., and the Tax and Customs Administration, through a protocol to be concluded between the entities.

Urban Development Coefficient and Economic Coefficient

As for the economic coefficient, it is calculated as the quotient of the average annual income per room established by the National Institute of Statistics, I.P., for the year preceding the tax year, and the minimum gross floor area of a T1-type dwelling (calculated in accordance with the General Regulations on Urban Construction).

In accordance with Law No. 56/2023 of October 6, these two coefficients will be published annually by decree of the government official responsible for finance.

To that end, the Decree includes, in an appendix, the urban development pressure coefficients for each locality applicable for the year 2023; this table is updated annually by government decree.

In addition to the urban density coefficient, as mentioned earlier, the economic coefficient for local lodging also contributes to the calculation of the tax base. However, this coefficient is not yet known and still requires regulation.

After each coefficient is applied, the taxable base is determined, to which a rate of 15% is applied.

It is important to note that the CEAL applies even when the operation of the Local Accommodation does not generate revenue relative to the expenses incurred, and that it is not deductible for the purposes of determining taxable income for corporate income tax (IRC), even if it was recorded as an expense for the tax period.

Taxes and Payments

It has been liquidated and reported by the taxpayer until June 20 of the year following the taxable event, without prejudice to the tax authority’s authority to assess the CEAL ex officio in the absence of a voluntary assessment, in which case notice shall be given to the owner of the real property as recorded in the cadastre on the date of the taxable event.

Similarly, the owner of the property where the business is operated is secondarily liable for payment of this fee, even if he or she is not the holder of the operating license for the local lodging facility.

Payment of the CEAL is due by June 25 of the year following the tax year, and in the event of late payment, late-payment interest is charged immediately.