For years, short-term rental (Alojamento Local, or AL) was treated as the obvious choice for any Lisbon property investor: higher gross revenue, greater flexibility, and confidence that tourism demand would keep growing. In 2026 the picture is more complex. Containment zones have been revised, 6,765 registrations were cancelled in a single municipal decision, and Portugal's 2026 budget introduced a reduced IRS rate that has materially improved the attractiveness of long-term rental.
This article compares both strategies with real 2026 numbers — gross revenue, operational costs, tax treatment and the legal framework — so investors can choose based on arithmetic, not assumptions.
What changed in 2026
Three events reshaped the short-term rental landscape in Lisbon in the opening months of 2026:
- January 2026: Lisbon City Council lifted its blanket suspension on new AL registrations that had been in force since 2023. The new model permits AL up to a cap of 10% of housing stock per parish in zones not subject to specific containment restrictions (Airbnb Newsroom, January 2026).
- February 2026: 6,765 AL registrations in Lisbon were cancelled for failure to hold mandatory AL insurance, reducing active registrations from approximately 18,500 to 11,774 (ECO, April 2026).
- May 2026: EU Regulation 2024/1028 came into force, requiring platforms (Airbnb, Booking.com) to verify RNAL registrations and automatically remove irregular listings from their platforms.
Alongside these regulatory shifts, Portugal's 2026 budget (OE 2026) fixed a 10% IRS flat rate on traditional residential rental income for contracts of at least 3 years with rents up to €2,300/month — a change that substantially alters the after-tax comparison between the two strategies.
Gross revenue compared
In 2026, a T1 apartment in Lisbon operated as short-term rental generates an average of €2,850/month in gross revenue (for actively managed properties at 73% occupancy), according to Investropa (H1 2026). The broader market average — including less optimised listings — sits closer to €2,200/month, with an occupancy rate of 50.8% and an average daily rate of €158 (AirROI, June 2025–May 2026).
In traditional long-term rental, the average T1 rent in Lisbon in 2026 is €1,539/month (DECO PROteste, January 2026).
| Metric | Short-term rental (73% occupancy) | Long-term rental |
|---|---|---|
| Gross monthly revenue | €2,850 | €1,539 |
| Gross annual revenue | €34,200 | €18,468 |
| Revenue premium (STR) | +85% over long-term rental | |
| Gross yield estimate (T1 at €307k) | ~11.1% | ~6.0% |
At first glance, short-term rental appears the clear winner. The problem lies in what comes next: the costs.
The real costs of short-term rental
Short-term rental carries a far heavier operational cost structure than long-term rental. Every cost line that doesn't exist in long-term letting exists in AL — and they stack:
| Cost item | Short-term rental | Long-term rental |
|---|---|---|
| Platform commission (Airbnb/Booking) | 3–15% of revenue | 0% |
| Property management | 20–30% of revenue (full service) | 0–5% (agency, optional) |
| Cleaning + laundry | €200–€500/month (owner's cost) | Tenant's responsibility |
| Utilities (water, electricity, internet) | €100–€250/month (owner's cost) | Tenant's responsibility |
| Mandatory AL insurance | Higher (specific policy required) | Standard home insurance |
| Social Security contribution | 5% of declared income | Not applicable (Category F) |
| Total operational costs | 30–45% of gross revenue | 10–15% of gross revenue |
Sources: Investropa H1 2026, Flatio 2025, GuestReady 2026.
Wear and tear: short-term rental involves a much higher guest turnover rate than long-term letting, significantly accelerating wear on furniture, appliances and finishes. A conservative estimate for additional maintenance costs in an active Lisbon AL property is €150–€300/month above long-term rental — a cost that rarely appears in short-term rental profitability models.
Tax: Category B vs Category F in 2026
The tax difference between the two strategies is less intuitive than it appears — and Portugal's 2026 budget shifted the balance significantly.
Short-term rental — Category B
Short-term rental (AL) is taxed as business activity under Category B in Portugal. Under the simplified regime, only 35% of gross revenue is considered taxable income — the remaining 65% is automatically treated as deducted expenses, without requiring individual invoices. The investor's progressive IRS marginal rate is applied to that 35% (CGD Saldo Positivo, 2026).
Long-term rental — Category F
Residential rental income is taxed under Category F. Under Portugal's 2026 budget, rental contracts with a duration of at least 3 years and monthly rent up to €2,300 benefit from a flat rate of 10% on the full rental income (Doutor Finanças, OE 2026).
Tax comparison summary
| Short-term rental (Cat. B) | Long-term rental (Cat. F) | |
|---|---|---|
| Taxable base | 35% of gross revenue | 100% of rent (at the reduced rate threshold) |
| Rate applied | Progressive IRS marginal rate | 10% flat (contracts ≥3 years, rent ≤€2,300) |
| Social Security | 5% of declared income | Not applicable |
| Monthly tax (example) | €492/month (35% IRS + SS) | €154/month |
Portugal's 2026 budget made long-term rental, for moderate rents, significantly more tax-efficient than short-term rental — an advantage that most online AL profitability calculators still fail to incorporate in their comparisons.
Lisbon containment zones: where AL is restricted
Before modelling AL viability for a specific property, it's essential to verify which containment zone its parish falls under. After the February 2026 registration cleanup, Lisbon City Council updated the containment map in April 2026:
Source: ECO / Lisbon City Council, April 2026.
A property in Misericórdia or Santo António cannot legally operate as AL regardless of its revenue potential. The RNAL register can be checked at rnt.turismodeportugal.pt.
Pro forma: T1 in Lisbon — which strategy wins?
With all costs and taxes included, how do the two strategies compare for a typical T1 in Lisbon, in a parish where AL is available?
| Item | Short-term rental (73% occupancy) | Long-term rental |
|---|---|---|
| Gross monthly revenue | €2,850 | €1,539 |
| Operational costs (−35% STR / −12% LTR) | −€998 | −€185 |
| Net revenue before tax | €1,852 | €1,354 |
| IRS + Social Security | −€492 | −€154 |
| Net monthly income | €1,360 | €1,200 |
| Net annual income | €16,320 | €14,400 |
With professional management and 73% occupancy, short-term rental generates €160/month more than traditional rental in net terms — a premium of just 13%. If occupancy falls to the broader market average (50.8%), the gross STR revenue drops to ~€2,200/month and the net income advantage over long-term rental effectively disappears.
The breakeven point: short-term and long-term rental reach similar net income at an occupancy rate of approximately 55–60%, using the operational costs above. Below that threshold, long-term rental produces superior net returns. Above it, short-term rental has the edge — but with meaningfully higher operational risk.
When to choose each strategy
The decision isn't purely about income — it also involves risk profile, time availability and location:
Long-term rental has become more attractive in 2026 for three concurrent reasons: the 10% flat IRS rate from Portugal's 2026 budget, the regulatory uncertainty surrounding AL (containment zones, risk of registration cancellation), and the sustained undersupply in Lisbon's rental market that keeps rents elevated. For investors building a long-term buy-to-let strategy, the tax framework has improved substantially.
Frequently asked questions
Is Airbnb still allowed in Lisbon in 2026?
Yes. In January 2026, Lisbon City Council lifted its blanket AL registration suspension. The new framework caps AL at 10% of housing stock per parish in open zones. Three parishes maintain absolute containment (no new licences): Santa Maria Maior, Misericórdia and Santo António. Three more are under relative containment: São Vicente, Arroios and Estrela.
Does short-term rental earn more than long-term rental?
In gross revenue, yes — up to 85% more. But after operational costs (30–45% of gross revenue), the net premium shrinks to around 13% at 73% occupancy. Portugal's 2026 budget 10% flat IRS rate for traditional rental has significantly improved long-term rental's after-tax competitiveness for moderate rents.
What is the tax rate for Airbnb in Portugal?
Under the simplified Category B regime, only 35% of gross revenue is taxable. The investor's progressive IRS marginal rate applies to that 35%. A 5% Social Security contribution on declared income also applies. For monthly revenue of €2,850, total tax is approximately €492/month at the 35% IRS marginal rate.
Is mandatory insurance required for Airbnb properties?
Yes. A specific AL insurance policy is legally mandatory in Portugal. In February 2026, 6,765 AL registrations in Lisbon were cancelled for failure to hold this policy. A standard home insurance policy does not cover the risks of short-term rental operation.
What is the RNAL and how do I check a property's registration?
The RNAL (Registo Nacional do Alojamento Local) is Portugal's official national short-term rental register, managed by Turismo de Portugal. Any property operating as AL must be registered. The register can be checked at rnt.turismodeportugal.pt. From May 2026, EU Regulation 2024/1028 requires platforms to verify RNAL status and automatically remove irregular listings.