On September 10th, 2024, the government approved Decree-Law 57/2024, which repeals the extraordinary contribution on local accommodation (CEAL).

The CEAL was introduced by the previous government in 2023 and was subject to many criticisms, which ultimately led to its repeal.

Among the main criticisms, we highlight the following:

• This measure was criticised as it increased the (high) tax burden in force, driving away potential new national and international investors.
• By increasing owners’ costs, CEAL ended up making local accommodation less competitive compared to other models, such as hotels or medium/long-term rental platforms. Consequently, the tourism sector was affected, as it was less competitive compared to other countries.
• The levy was also seen as a disproportionate burden for small landlords, who are heavily dependent on this type of income. The contribution was criticised for not distinguishing between owners of several properties and owners of just one property.
• Another point of criticism is the devaluation of properties that have been bought or remodelled with the aim of being used for this purpose.
• Many owners and associations in the sector also criticised the government’s lack of dialogue prior to the implementation of CEAL. The measure was seen as an imposition without due public consultation, which generated dissatisfaction and a sense of insecurity for investors in the sector.
• The way in which CEAL was introduced reinforced the perception of instability in the rules governing the local accommodation sector, which undermines the confidence of both national and international investors in our country.

To summarise, these were some of the main criticisms of CEAL that ended up leading to its repeal which, in our opinion, is yet another correct measure on the part of the current government, which is seeking to restore credibility and investment in our country.

The repeal of CEAL will have retroactive effects from December 31st, 2023, even though the Decree-Law states that the repeal will only take effect from December 31st, 2024.

The Government has already confirmed that it has requested that the text be amended so that the repeal takes effect retroactively to December 31st, 2023, so we await the publication of the rectification to the Decree-Law.