Residential Tourism in Portugal: A Decade of Growth Amid Fiscal Challenges
A recent study has revealed that residential tourism in Portugal generated €15 billion in tax revenue for the state between 2014 and 2023. However, the report also highlighted that in 2024, Portugal imposes the highest fiscal burdens on acquiring a second home among its Mediterranean competitors.
The findings were unveiled by Nova School of Business and Economics in collaboration with the Portuguese Association for Residential Tourism and Resorts during a presentation held on December 9. The two studies, “Residential Tourism: Macroeconomic Impact” and “Residential Tourism: Fiscal Benchmarking”, aimed to assess the sector’s contribution to the Portuguese economy and its fiscal competitiveness.
Economic Impact from 2014 to 2023
Between 2014 and 2023, residential tourism in Portugal significantly boosted the economy, generating 130 million overnight stays and a total economic impact of €184.5 billion. The sector contributed €96.9 billion in Gross Value Added (GVA), of which nearly half (€43.8 billion) supported wages, reflecting its role in wealth and job creation. Over this period, an average of 284,584 full-time jobs were created annually.
Foreign property owners also played a crucial role, contributing €672 million annually to the economy and supporting 906 jobs and €129 million in wages on average each year. The analysis included various property types, such as tourist villages, serviced apartments, and hotel-apartments, with impacts measured across construction, sales, resales, and usage by non-resident owners.
Portugal’s Fiscal Standing in 2024
The fiscal benchmarking study compared the total tax burden on acquiring second homes in Portugal with those in Mediterranean countries like Spain, France, Italy, Greece, Croatia, Cyprus, and Montenegro. It found that Portugal imposes the highest tax rate—25.4%—on new second-home purchases.
For second-hand properties valued at €500,000, the fiscal burden in Portugal amounts to approximately €37,000, the highest among the countries analyzed. Additionally, Portugal has the lowest exemption threshold (€600,000) for wealth taxes on high-value properties, compared to €700,000 in Spain and €1.3 million in France.
On capital gains taxes, Portugal ranks second-highest after France, reducing the investment return and impacting fiscal competitiveness.
Balancing Growth and Fiscal Policy
Pedro Fontainhas, Executive Director of the Portuguese Association for Residential Tourism and Resorts, emphasized the sector’s dual potential and challenges:
“Residential tourism is a powerful driver of investment, job creation, and economic growth. However, the excessive tax burden on second-home purchases in Portugal risks deterring investors and limiting the sector’s potential.”
Fontainhas advocated for competitive fiscal policies, citing Greece and Italy as examples of countries that have successfully incentivized investment. Greece, for instance, suspended VAT on new properties to stimulate sales, while Italy offers tax benefits for non-resident property owners.
“Portugal has all the ingredients to be a global leader in residential tourism. To fully capitalize on this potential, we need to create a more investor-friendly fiscal environment that aligns with international benchmarks,” he concluded.
Source: Tnews
