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Alojamento local: Category B or Category F? 6 rules to choose the option with the lowest IRS
Step Inside Accounting · Practical guide
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1. First, check who holds the operation
The IRS on alojamento local depends on who runs the establishment – the operator shown in the registration – and not only on who owns the property. The tax authority distinguishes these situations:
- you own it and run it: the income is self-employment income (Category B), with the yearly option for Category F that we explain below;
- you own it and hand over the operation to another person or company, who becomes the operator and pays you rent (fixed or a percentage of turnover): what you receive is rent (Category F), unless you opt for Category B. Whoever runs it has Category B income;
- you started by running it and then handed the operation over to another operator: what you receive remains Category B, just like the income of whoever took over;
- you run a property that is not yours (rented or lent to you): you are the operator, and your income is Category B.
Hiring a management company to handle bookings and cleaning changes nothing if the registration stays in your name: you are still the operator, and the manager’s commission is an expense. The rules below are for whoever holds the operation.
2. If you are the operator, you are taxed as a self-employed worker
Alojamento local is a business activity, and the income is self-employment income (Category B). Under the simplified regime, only part of what you receive counts for IRS:
- 35% for a house or apartment;
- 50% for a house or apartment in a containment area;
- 15% for rooms and hostels.
That amount is added to your other income and taxed at the normal IRS rates. You do not need to prove expenses, except for the 15% rule for a house or apartment outside containment areas.
3. For a house or apartment, you can opt for the rental rules
If the alojamento local is a house or an apartment, you can opt to be taxed under the rules for property income (Category F), the same as for rent. The option:
- is made in the IRS return, in the self-employed annex, in a dedicated section where you list each property’s income and expenses;
- only applies to that year: the following year you can choose again;
- does not exist for rooms or hostels.
Opting for Category F only changes the IRS calculation. The activity stays open and you keep issuing invoices, charging VAT where applicable and meeting your other obligations.
4. Under Category F, you pay on income minus actual expenses
Under Category F, the income is the year’s revenue minus the expenses actually paid that year to earn it, with an invoice:
- booking platform commissions;
- cleaning and laundry;
- condominium fees, IMI and insurance;
- utilities (electricity, water, internet);
- repair and maintenance work.
Mortgage interest, wear and tear on the property, furniture, appliances and decoration, and the additional IMI do not count. The result is taxed at 28%, or at the normal IRS rates if you choose to aggregate it.
5. Run the numbers every year
The comparison depends on two things: the weight of your expenses and your marginal IRS rate.
- Under Category B, you pay your marginal rate on 35% (or 50%) of revenue.
- Under Category F, you pay 28% on revenue minus expenses.
Rule of thumb: divide the Category F tax by the Category B base. If your marginal IRS rate is higher than that figure, Category F gives less tax. In most cases outside containment areas, Category B wins. In containment areas, with high expenses and high income, Category F can pay off.
6. The choice does not change Social Security or VAT
The option only concerns IRS:
- VAT: the same under both – exempt up to €15,000 a year and, above that, 6% on the mainland;
- Social Security: if alojamento local in a house or apartment is your only self-employment income, you are excluded from contributions, whichever category you choose for IRS;
- selling the property: the option does not take the property out of the activity. For the capital gain, the rules in our article on selling an alojamento local property apply.
Example
Miguel has an apartment in alojamento local in a containment area in Lisbon, and he also has a salary. In 2026, guests pay €30,000, without VAT. He paid €12,500 of expenses deductible under Category F: platform commissions (€4,500), cleaning (€3,600), utilities and internet (€1,500), condominium fees (€1,200), maintenance (€800), IMI (€600) and insurance (€300). He also paid €2,400 of mortgage interest and €3,000 for a new sofa, which do not count.
- Category B (containment area): a base of €15,000 (50% of €30,000), added to his salary.
- Category F: income of €17,500 (€30,000 − €12,500); at 28%, that is €4,900 of IRS.
Threshold: €4,900 ÷ €15,000 = 32.7%. If Miguel’s marginal IRS rate is above 32.7%, Category F gives less tax; if it is below, Category B is better.
- If the apartment were outside a containment area, the Category B base would be €10,500 (35%), and Category F would only pay off with a marginal rate above 46.7% (€4,900 ÷ €10,500).
Team tip
Keep every alojamento local invoice with your NIF, even if you always stay in Category B: they are what makes the comparison possible. Before you file your IRS return, we send you both simulations and you choose the one with less tax that year.
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This article is for information only and does not replace professional advice. Figures and rules are those in force at the date of publication and may change.
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