The increasing professionalisation of the short-term rental sector has led to the widespread use of operating agreements between property owners and companies specialising in the management of this type of establishment. However, these business models continue to raise a number of questions regarding their tax treatment, particularly for VAT purposes.
Through Binding Ruling No. 29726, dated 24 June 2026, the Portuguese Tax Authority clarified a particularly relevant issue: the VAT rate applicable to the remuneration received by the property owner when assigning the operation of a short-term rental establishment to a management company.
The case under analysis
In the case submitted to the Tax Authority, the applicant owned a property and held the corresponding short-term rental licence, intending to enter into an operating agreement with a company specialising in the management of this type of establishment.
Under the agreement:
- the management company assumed full responsibility for the operation of the short-term rental establishment;
- it was responsible for attracting guests, managing bookings, reception services, cleaning, maintenance and all other operations necessary for the operation of the establishment;
- invoices to guests were issued directly by the management company;
- the property owner received remuneration corresponding to a percentage of the revenues generated, after deduction of the contractually agreed costs.
In light of this contractual arrangement, the issue was whether the invoice issued by the property owner to the management company could benefit from the reduced VAT rate applicable to short-term rental services.
The Portuguese Tax Authority’s position
The Tax Authority begins by clearly distinguishing between two separate supplies of services.
On the one hand, there is the accommodation service supplied by the management company to the guests. This supply falls within Item 2.17 of List I annexed to the Portuguese VAT Code and therefore benefits from the reduced VAT rate applicable to accommodation provided by hotels and short-term rental establishments.
On the other hand, the transaction carried out by the property owner does not constitute a supply of accommodation services but rather the assignment of the operating and management rights over the establishment to the management company.
According to the Tax Authority, this transaction constitutes an autonomous supply of services subject to Article 4(1) of the Portuguese VAT Code and is not included in any of the items contained in the annexed VAT lists allowing the application of reduced or intermediate VAT rates. Consequently, it is subject to the standard VAT rate.
There is no mere intermediary activity
One of the most relevant aspects of this Binding Ruling concerns the analysis of Article 4(4) of the Portuguese VAT Code, which governs situations in which an agent acts in its own name but on behalf of another person.
The Tax Authority expressly excludes the application of this provision, considering that the management company does not act as a mere intermediary.
In fact, the company assumes full responsibility for operating the establishment, provides the accommodation services directly to the guests, determines the operating conditions and maintains the contractual relationship with the end customers.
Since there is no identity between the services supplied by the property owner and those subsequently supplied to the guests, the conditions required for the legal fiction established by the aforementioned provision are not met.
Practical implications for property owners and short-term rental operators
The position adopted by the Portuguese Tax Authority is particularly relevant for operating agreements entered into between property owners and management companies.
In practice:
- the management company will continue to apply the reduced VAT rate to the accommodation services supplied to guests;
- the property owner must invoice the management company for the assignment of the operation of the establishment by applying the standard VAT rate;
- the contractual characterisation of the arrangement and the actual allocation of responsibilities between the property owner and the management company play a decisive role in determining the correct VAT treatment.
Accordingly, contracts that appear to be similar may produce different tax consequences depending on whether the management company acts merely as an intermediary or effectively assumes the autonomous operation of the establishment.
Conclusion
Binding Ruling No. 29726 confirms an important position adopted by the Portuguese Tax Authority: the reduced VAT rate applicable to short-term rental only benefits the entity that effectively supplies the accommodation services to the guests.
Where the property owner merely assigns the operation of the establishment to a third-party entity that fully assumes the activity, the remuneration received no longer constitutes consideration for accommodation services but instead qualifies as an autonomous supply of services subject to the standard VAT rate.
This interpretation highlights the importance of properly structuring the contractual relationship between property owners and management companies, as well as correctly characterising the relevant transactions for VAT purposes, thereby mitigating future tax risks.
Belzuz Abogados, S.L.P. has a team of lawyers and tax advisers with extensive experience in both domestic and international taxation, providing specialised advice to businesses operating in the real estate, tourism and short-term rental sectors. Our team regularly assists clients in structuring operating models, assessing their tax implications and implementing legally sound and tax-efficient solutions.
Should you wish to assess the tax treatment of your business or obtain advice regarding the contractual structure best suited to your business model, the Tax Department of Belzuz Abogados, S.L.P. will be pleased to assist you.