City Tax to be Applied in the Algarve

The Diário da República has published a new regulation n.º 725/2019 that approves a tourist tax of €1.50 per person/night in the municipality of Faro. This regulation will be brought into effect from the 1st of March, 2020. When it comes into force, the surcharge could reap as much as €20 million per year for the Algarve, which would be used to improve what is Portugal’s top tourist destination in collaboration with a wide array of regional partners.

According to the law, this fee will be applied to “paid overnight stays in tourist resorts or local accommodation establishments located in the geographical area of the Municipality of Faro, per night, for a maximum of seven consecutive nights per person per stay”. This will also be applied regardless of whether the reservation was made in person, on line, or other.

In addition to this, the amount will apply to “guests aged thirteen years and above, regardless of their place of residence, during the months of March to October each year.”

In fact, all of Algarve’s local authorities save one have said yes to the tourist tax. The Silves Council and Algarve tourism board are currently against its application in the region”. In comments to newspaper Correio da Manhã, João Fernandes, the region’s tourism chief, expressed that “This is a wrong decision, which goes against tourist demand and could cause a loss of competitiveness for the Algarve”, he warned, adding the tax could “generate inequalities within the region and weaken the destination as a whole” because it will not be applied at the same time in all municipalities”.

Other Portuguese city’s commonly frequented by a large influx of tourists such as Lisbon and Porto already apply tourist taxes of €1 and €2, respectively. In Porto, the revenue obtained from the tourist tax, which came into force last March, exceeded the city’s expectations by 50%. On average, it has been determined that it generates an average of €750,000 a year for its coffers.

Similarly, in Lisbon, from 2016-2017, the tourist tax of €1 per person per night has brought an extra €18.5 million for the city’s coffers where it is primarily being used to finance electric street cleaning vehicles.

A framework has yet to be formulated by the tourism board in the Algarve regarding what exactly will be done to improve the region, however, the overall consensus on the matter is that it will have a “strong bearing on the tourism sector and region”.

Written by: Ismat Ara Khan