New special tax on AL activity: CEAL or Contribuição Extraordinária sobre o Alojamento Local

New Special Tax on the AL Activity: CEAL or Contribuição Extraordinária sobre o Alojamento Local

The extraordinary contribution on short-term rental activity (Contribuição Extraordinária sobre o Alojamento Local or CEAL) was created by Law no. 56/2023, of October 6^th (which approved the so called Programa Mais Habitação).

CEAL will be payable from 2024 (referent to the year 2023) by those who hold licenses for short-term rental activity (Alojamento Local or AL) on independent units or autonomous divisions of buildings that are licensed for habitation purposes.

How is CEAL calculated?

CEAL is calculated as follows:

Economic Coefficient of AL	X	Urban Pressure Coefficient	X	Gross private area of the property	X	CEAL rate
(Annual RevPAR of the year / minimum area of a T1 apartment)		(As defined for each zone by Ministerial Order no. 455-E/2023, of Dec 29)		(As per the Urban Land Book of the property)		15%

The Economic coefficient of AL activity to be considered in 2023 for the CEAL due in 2024 is calculated using the RevPAR of the year 2019, as defined by the Portuguese Statistics Institute (INE). This was set at € 29.90 per day, which yearly corresponds to the amount of € 10,913.15 (29,9 * 365 days). The minimum area of a T1 apartment is legally 52 sqm, hence the economic coefficient of AL to be considered when determining the CEAL due in 2024 will be € 209.87.

The Urban Pressure Coefficients were defined by Ministerial Order no. 455-E/2023, of December 29^th and, amongst other, depend on the location of the property and the average rental amount per sqm (cfr. Article 7 of the Annex to Law no. 56/2023, of October 6^th).

Example

Considering an apartment located in Faro district, Albufeira council, parish of Albufeira e Olhos de Água (urban pressure coefficient of 0.4099), with a gross private area of 100sqm, the CEAL due in 2024 will be as follows:

(209.87 * 0.4099 * 100) x 0.15 = € 1,290.38

CEAL exclusions and exemptions

There are some AL businesses excluded from CEAL and others who are not subject to it. The most relevant exclusion at moment is that of businesses carried out in inland properties (areas defined by Ministerial Order no. 208/2017, of July 13^th). It is likely that the new CEAL won’t be applicable in Madeira and Azores islands too, subject to regional governments decision.

With regards to CEAL exemptions, they apply to housing properties that are not building units or independent parts of a building (for example, villas). This means that AL businesses developed in detached villas are not subject to CEAL. AL businesses persued using holder’s permanent habitation and not exceeding 120 days per year are also exempt of the CEAL.

Is the legality of CEAL unquestionable?

The constitutionality of CEAL is highly debatable. In fact, this new special contribution does not consider the effective income generated by each AL business, but a national average income determined according to statistics. In addition, AL businesses developed in detached villas are not subject to CEAL, and property owners who are not even in charge of the AL activity, but have the exploration assigned to a third-party, are jointly liable for the payment of CEAL before the Tax Authority.

Although the CEAL declaration must be submitted and paid as legally foreseen (by June 20^th and 25^th, respectively), the unconstitutionality of this extraordinary contribution can be argued before the Tax Authority and/or in court.

This legal alert contains general information and does not constitute, nor shall it be deemed in any circumstances, as legal advice to a concrete case. This information is generic and does not waive the need for a detailed analysis of the applicable regulations.