Renting Out Property in Portugal for Israelis: Alojamento Local or a Long-Term Lease, Registration, Tax and Reporting in Israel

1Can an Israeli who is not resident in Portugal rent out their apartment?

Yes. Portugal does not restrict a non-resident from renting out property, but there are two entirely different tracks: short-term letting to tourists under Alojamento Local (AL), and a long-term residential lease under ordinary tenancy law. Each track has a different registration, different ongoing obligations and different taxation, both in Portugal and in Israel.

This guide deals with the stage after the purchase. We cover the purchase process and the purchase and holding taxes (IMT, IMI and AIMI) in separate guides on Portugal.

2What is Alojamento Local and which rules apply to it today?

Alojamento Local is the regime that governs paid accommodation for short periods, such as letting through Airbnb or Booking, and it is set out in Decree-Law 128/2014. Every such unit must be entered in the national register (RNAL) and receive a registration number, and that number must be shown in every advertisement.

In recent years the rules have changed twice. The Mais Habitação package (Lei 56/2023) suspended new AL apartment registrations in 2023 in most of the country, limited registrations to five years and created an "extraordinary contribution" on AL called CEAL. In 2024 most of these measures were reversed:

• CEAL was revoked by Decree-Law 57/2024, in force from 11 September 2024, with retroactive effect. In practice no one was required to pay it.
• The general suspension of new registrations was lifted by Decree-Law 76/2024, in force from 1 November 2024. The five-year limit was also revoked, and registrations are again not limited in time.
• The registration is transferable again on the sale of the property or the transfer of shares in a company that holds it, but a municipality may restrict the transfer of new registrations in containment areas.
• Power moved to the municipalities. Municipalities with more than 1,000 registrations, such as Lisbon and Porto, had to decide within 12 months whether to adopt a regulation. They may designate "containment areas" (áreas de contenção) and "sustainable growth areas", restrict new registrations there, and even suspend registrations for up to one year until the regulation takes effect.
• Condominium. Prohibiting AL in a building requires amending the condominium rules by a two-thirds majority of the building's permillage. An objection to AL in a specific unit requires a reasoned resolution of more than half of the permillage, based on repeated and proven disturbances, and the decision to cancel the registration rests with the mayor.

3Can a new AL be opened in Lisbon or Porto in 2026?

In the city centres, hardly at all. Both Lisbon and Porto now have municipal regulations that, as a rule, prohibit new registrations in containment areas, with narrow exceptions.

Lisbon: the amendment to the municipal AL regulation (RMAL) entered into force on 6 December 2025. The municipality measures the ratio of AL units to permanent dwellings. A ratio of 10% or more in a parish (freguesia) or neighbourhood defines "absolute containment", and a ratio of 5% to 10% defines "relative containment". According to the Cuatrecasas review, absolute containment applies in the parishes of Santa Maria Maior, Misericórdia, Santo António, São Vicente, Arroios and Estrela. In containment areas new registrations are, as a rule, not accepted, and a property that was let under a residential lease in the last five years is blocked from registration. A critical point for buyers: in a containment area, the transfer of a registration for an apartment or a house generally causes it to lapse.

Porto: under Regulamento n.º 1462/2024, published in December 2024, the historic parishes of Miragaia, Santo Ildefonso, São Nicolau, Sé and Vitória are containment areas, and the quota for new registrations there is zero, except for exceptions that require express authorisation from the mayor and a prior inspection.

4How do you register an AL and what has to be run on an ongoing basis?

Registration is made by prior notice (comunicação prévia com prazo) to the mayor through the ePortugal electronic counter (Balcão Único Eletrónico, which replaced the Balcão do Empreendedor), and the municipality may object within 60 days, or 90 days in a containment area. The list of steps for a non-resident:

1. NIF and arrangements with the tax authority: a Portuguese tax number, and a tax representative or enrolment in the tax authority's electronic notifications.
2. Opening of activity (início de atividade) with the tax authority as a category B taxpayer. A copy of the declaration is attached to the registration application.
3. Property documents: an identity document, or the access code to the company's permanent certificate, a declaration on the suitability of the property, the caderneta predial, and if the property is leased, the landlord's written consent.
4. Civil liability insurance with a minimum cover of EUR 75,000. Expired or invalid insurance is grounds for cancelling the registration.
5. Complaints book (livro de reclamações), as in any business.
6. The registration number in every advertisement, on platforms and on an independent website.
7. Reporting foreign guests: since SEF was dissolved, reporting is made in the SIBA system, whose operational management passed to the UCFE unit within the internal security system, not to AIMA. The accommodation form (boletim de alojamento) for each foreign guest is sent within three working days of arrival.
8. Municipal tourist tax: the AL operator collects it from guests and pays it over to the municipality. In Lisbon EUR 4 per night and in Porto EUR 3 per night, in both up to seven nights. Dozens of other municipalities charge a similar tax at different rates.

5What has to be arranged for a long-term residential lease?

For a long-term lease you must report the contract to the tax authority by the end of the month following its start, pay stamp duty of 10% of one month's rent, and issue the tenant electronic rent receipts through the Portal das Finanças. Reporting is made on form Modelo 2, and a change in rent or the end of the contract is reported within the same deadline. Failure to report may lead to a fine, and a tenant whose landlord did not report may report on their own.

Rent increases. If the contract does not set a different update mechanism, the landlord may raise the rent once a year according to a coefficient calculated by the National Statistics Institute. For 2026 the coefficient is 1.0224, that is up to 2.24% (Aviso n.º 23174/2025/2), with written notice at least 30 days in advance.

A residential lease in Portugal protects the tenant, and eviction is not a quick process. It is therefore important to draft carefully the term, renewal, guarantees and the condition of the property at handover.

6How much tax does a non-resident pay on a long-term lease in Portugal?

As of October 2026, income from a residential lease (category F) is taxed at a flat rate of 25%, and non-residential letting, such as an office or a shop, at 28%. The tax is calculated on the rent less allowable expenses. Under Article 41 of the Personal Income Tax Code (CIRS), maintenance and conservation expenses (including works paid in the 24 months before the lease starts), condominium charges, IMI and stamp duty are allowable. Mortgage interest, depreciation, furniture and AIMI are not deductible.

The 10% rate was added by Decree-Law 97/2026 (Article 45-C of the Tax Benefits Statute, EBF) and applies from 1 January 2026, including to existing contracts that meet the conditions. The cap is 2.5 times the 2026 minimum wage, that is EUR 2,300 a month. The wording of the article does not exclude non-residents, but before relying on it you should confirm its application with a Portuguese accountant.

What about progressive rates instead of a flat rate? The Code allows residents of EU and EEA states to opt for the ordinary progressive rates instead of the flat rate. Israel is not one of those states, so an Israeli who is not resident in Portugal is, as a rule, taxed at the flat rate.

7How is Alojamento Local income taxed?

AL income is business income (category B), not passive rent. As of October 2026, a non-resident is taxed on it at a flat rate of 25%, but only on the taxable portion of the income.

Under the simplified regime (regime simplificado), which applies to most small operators, taxable income is a fixed share of gross income: 35% of AL income from an apartment or a house, and 50% when the property is in a containment area. Thus 25% tax on 35% of the income is roughly 8.75% of turnover, and in a containment area roughly 12.5%. The law includes further adjustment rules, so this is an order of magnitude only. You should also check your VAT position, where special rules apply to non-residents.

8What is the practical difference between short-term and long-term letting?

9How is a long-term lease connected to the IMT refund?

Since Decree-Law 97/2026 of 20 May 2026, a buyer who is not resident in Portugal pays IMT on a residential property at a flat rate of 7.5%, but the tax authority cancels the difference, on request, if the property is let for housing under the conditions of the law. Under Article 17 of the IMT Code, as amended, the conditions are:

• Within six months of the purchase, the property is allocated to a residential lease at a monthly rent not exceeding the moderate-rent cap (EUR 2,300 as of 2026).
• The property is let for at least 36 months, consecutive or not, during the first five years after the purchase.
• The request is filed with the tax authority within six months of the date the lease contract is signed.

The refund is the difference between the IMT paid and the tax under the ordinary rates. Letting to tourists under AL is not a "residential lease" under the wording of the article, so anyone planning AL should assume that the 7.5% is a final cost. Anyone planning a long-term lease should time the signing of the contract already at the time of purchase.

10How is the income reported in Israel and how is double taxation avoided?

An Israeli resident must report the rental income from Portugal in Israel, and the tax treaty between Israel and Portugal allows the Portuguese tax to be credited against the Israeli tax. Under Article 6 of the treaty, income from immovable property situated in Portugal, including letting, may be taxed in Portugal, and the article also applies to services connected with the use of the property, meaning AL as well. Under Article 23(2), Israel grants a credit equal to the tax paid in Portugal, up to the Israeli tax on the same income.

In Israel there are two main tracks for rental income from abroad:

• The regular track: marginal tax on the net income, after deducting expenses and depreciation, and a credit for the Portuguese tax. Where the tax in Portugal is high, the additional tax in Israel may be low or nil.
• The 15% track (section 122A of the Income Tax Ordinance): 15% on gross income, less depreciation only, without a credit for the tax paid in Portugal. Since Portugal taxes a non-resident's rent at 25%, or 10% under the moderate-rent track, you need to calculate carefully whether this track is worthwhile.

Short-term letting with ancillary services, such as cleaning and changing linen, may be treated in Israel as business income. In that case the 15% track does not apply, and National Insurance contributions may also be due. In any case, anyone with rental income from abroad files an annual return (Form 1301), even when there is no profit.

Transferring funds and signing remotely. Keep receipts, Portuguese tax assessments and confirmations of the transfer of funds to Israel, because they are the basis for the credit in Israel. Most actions, from AL registration to signing a lease, can be carried out from Israel through a power of attorney to a lawyer in Portugal, signed and certified with an apostille.

11What to do before renting out property in Portugal, and how we accompany you

The choice between AL and a long-term lease is best made before the purchase, not after it, because it affects the choice of property and area, the IMT, the ongoing tax and the reporting in Israel. Local acts, such as registration with the municipality, representation before the tax authority and drafting the lease under Portuguese law, are carried out by licensed local lawyers and accountants. We coordinate the process from Israel: we review the documents and the registration status of the property, prepare a certified power of attorney, and examine the deal from the perspective of an Israeli investor, including the interplay between tax in Portugal and reporting in Israel.

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