Short-term rental in Madeira operates under the Alojamento Local (AL) framework: registration before the first guest, compliance with the establishment requirements, and taxation of the income, most commonly under the simplified regime, where only a fraction of gross revenue is presumed taxable. Madeira, as an autonomous region, has applied the national AL framework with its own regional and municipal dynamics, and the mainland’s restrictive episodes have not translated one-for-one to the region, but the rules are municipality-sensitive and date-sensitive, so verification before listing is not optional. Here is the 2026 picture.
Registration: before the first booking, not after
Operating AL requires prior registration of the establishment (the registo/number that platforms request), communication to the competent municipal authority, and compliance with the category’s requirements, safety equipment, complaint book, guest communication duties including the SEF/AIMA guest reporting for foreign guests, and civil-liability insurance. Platforms delist unregistered properties, and operating unregistered exposes the owner to fines that dwarf the compliance cost. Condominium rules matter too: recent national reforms have strengthened the condominium’s voice over AL in fractions of residential buildings, check the building’s position in writing before you buy for AL, not after.
How AL income is taxed: the simplified regime’s arithmetic
For individual owners, AL is business income (Category B), not rental income (Category F), a distinction with consequences. Under the simplified regime, the taxable base is a coefficient of gross revenue: 0.35 for standard AL establishments (so 35% of revenue is taxed at progressive rates, with the remainder presumed to cover costs), with a higher coefficient applying to establishments in defined containment situations and different treatment for other categories. Organised accounting is the alternative when real costs exceed the presumption. Two accompanying realities: social security contributions attach to sustained Category B activity (with exemptions in defined cases, pensioners drawing contributory pensions among them), and VAT enters at the applicable threshold, with AL enjoying the reduced accommodation rate once registered.
The property-tax interface, and the exit question
AL touches the property’s other taxes: IMI continues normally; municipal tourist taxes apply where the municipality has created them (Madeira’s municipalities have moved on this in recent years, verify the current per-night rules for your concelho); and the historically contentious question of capital gains upon ceasing AL and selling has been softened by reforms, the affectation of a property to AL and back no longer triggers the old deemed-disposal mechanics in the way owners feared, but the gain computation on eventual sale still reflects the business-use history, so the file (dates, values, depreciation taken) must be kept from day one.
What to verify before listing, in one checklist
- Current municipal position in your concelho, registration acceptance, any containment zones, tourist tax.
- Condominium constraints for apartments.
- The right tax configuration: simplified vs organised accounting, VAT registration and invoicing setup, contribution position.
- Insurance and establishment requirements.
- If you are a non-resident owner: the withholding and representation mechanics, and the treaty position on the income.
MCS runs this verification as a fixed-scope engagement and then carries owners on an annual compliance avença, the model most of our AL clients use.
Frequently asked questions
Is new AL registration possible in Madeira in 2026?
The region has not replicated the mainland’s most restrictive episodes wholesale, but the position is municipal and current, we verify your concelho‘s status at engagement date rather than relying on headlines.
How much of my AL revenue is actually taxed?
Under the simplified regime, typically 35% of gross revenue forms the taxable base for a standard establishment, taxed at your progressive rates. Whether the presumption beats your real costs is the regime-choice analysis.
Do I pay social security on AL income?
Sustained Category B activity generally attracts contributions, with relevant exemptions (notably for pensioners receiving contributory pensions). The position is personal and worth confirming before the first quarter’s declaration.
Do I charge VAT to guests?
Above the registration threshold (or upon opting in), AL accommodation carries the reduced VAT rate applicable in Madeira, with invoicing obligations to match. Below it, the exemption regime can apply.
I live abroad, can I run AL in Madeira remotely?
Yes, with a local operational answer (check-in, cleaning, guest reporting) and the tax side handled: non-resident owners file Portuguese returns on the AL income, with treaty coordination at home.
Does AL affect my capital gains when I sell?
The old deemed-transfer fear was defused by reform, but business-use history still shapes the eventual gain computation, keep the affectation dates and figures documented from the start.
Buying to let short-term in Madeira? MCS verifies the licensing position for your specific municipality, sets up the right tax configuration, and runs the annual AL compliance, book a consultation online; the fee is credited to the annual engagement.
This article is provided for general informational purposes only and reflects our understanding of the legal and tax framework in force on the date of writing or last review indicated above. It does not constitute legal, tax, accounting or investment advice, does not cover all rules that may apply to your specific circumstances, and does not create any client relationship with Madeira Corporate Services. Legislation and administrative practice change frequently, and their application depends on the facts of each case. Before acting on any information contained in this article, you should obtain professional advice tailored to your situation. Madeira Corporate Services accepts no liability for decisions taken on the basis of this article. Services reserved by law to lawyers are provided by duly registered legal professionals, identified as such.
Lília has graduated in 2002 with a law degree from Universidade Nova de Lisboa. She joined MCS’s legal team in 2003, providing support to the legal department in corporate and shipping… Read more
