Madeira has become one of Europe’s most attractive destinations for property investment and tourism. Many foreign investors buy homes here to operate them as short-term rental properties.
However, Portuguese tax and accounting rules for local accommodation (Alojamento Local) can be complex. To stay compliant, owners must follow strict procedures covering VAT, IRS/IRC, municipal taxes, and social security.
At Madeira Corporate Services (MCS), we assist investors in managing these obligations efficiently. Here are five ways our team simplifies the tax and accounting side of your short-term rental business.
1. We Handle All Tax Registrations and Licensing
Operating a short-term rental in Madeira requires formal registration. The property must be declared to the Municipal Council and listed in the Alojamento Local registry.
MCS coordinates the entire process. We ensure that your property obtains a valid registration number, NIF, and is classified correctly in Portuguese law.
We also help select the proper tax framework, whether as an individual or through a company, so that you can avoid unnecessary liabilities in the future.
Through this preparation, your property starts operating legally from day one.
2. We Manage Your Accounting and VAT Obligations
In Portugal, income from short-term rental activity is taxable. Depending on your structure, it may fall under Category B income (self-employment) or corporate income (IRC).
MCS prepares and submits your periodic VAT returns, if applicable, and ensures invoices are issued correctly through certified software.
Because VAT registration thresholds differ, we evaluate whether your turnover requires quarterly VAT filings or whether you qualify for an exemption.
Our accounting team also records all eligible expenses, maintenance, cleaning, and utilities, to optimise your taxable base and ensure full compliance with the Portuguese Accounting Standards (SNC).
3. We Optimise Your Tax Regime and Fiscal Efficiency
Choosing the correct tax regime can make a significant difference. For smaller owners, the simplified regime under the IRS allows fixed coefficients to be used to determine taxable income. For companies, the corporate tax regime may offer broader deductions and strategic reinvestment options.
MCS analyses your activity level, ownership structure, and residency status to determine the most efficient model.
When relevant, we evaluate whether your activity qualifies under Madeira’s International Business Centre (IBC), where corporate tax rates can drop to 5% for eligible operations.
This tailored planning ensures that your short-term rental remains both profitable and compliant.
4. We Assist with Municipal and Property Taxes
Property ownership in Madeira involves several municipal obligations.MCS monitors Municipal Property Tax (IMI), Additional Municipal Property Tax (AIMI), and local tourist taxes applicable to short-term rental operations.
We handle declarations, payments, and represent you before local authorities. This prevents fines and ensures your property maintains good standing with the municipality and the tax authority.
By consolidating all your obligations under one provider, you save time and reduce the risk of administrative errors.
5. We Prepare Annual Filings and Provide Ongoing Support
Every short-term rental business is required to file annual tax returns and accounting reports.
MCS prepares your Simplified Corporate Information (IES) or Modelo 3 IRS declaration, depending on your structure. We also manage your Beneficial Ownership Register (RCBE) and assist with compliance audits.
Our local experts provide ongoing advice on legal changes, such as adjustments to municipal regulations or new environmental requirements affecting tourism properties.
With continuous support, you can maintain peace of mind and focus on hosting guests, rather than paperwork.
Why Choose Madeira for Your Short-Term Rental Business
Madeira offers a unique combination of safety, scenery, and stability. As an autonomous region of Portugal and part of the European Union, it provides:
- Year-round tourism demand;
- Favourable tax incentives;
- Political and economic stability;
- Strong property rights under EU law.
With its growing reputation among digital nomads and retirees, Madeira remains an excellent market for short-term rental investors who value compliance and long-term profitability.
Key Takeaways
Managing short-term rentals in Madeira involves more than renting out your property. It requires precise tax reporting, sound accounting discipline, and a thorough understanding of local regulations.
By partnering with Madeira Corporate Services (MCS), you gain the expertise of a team that has supported international investors for over 30 years. We simplify complex compliance into a smooth, transparent process, allowing you to focus on returns, not red tape.
This article is for informational purposes only and does not constitute legal or tax advice. Always seek professional guidance before making investment or tax decisions related to property rentals in Portugal.
The founding of Madeira Corporate Services dates back to 1996. MCS started as a corporate service provider in the Madeira International Business Center and rapidly became a leading management company… Read more
