Tourism. Taxes scare the Portuguese more

The application of tourist taxes could lead to the 'exodus' of some domestic tourists because they are "more price-sensitive," Cristina Siza Viera, president of the Portuguese Hotel Association (AHP), told Nascer do SOL . She gives examples: "For family stays, this additional charge has a significant impact and can be a deciding factor, especially during the summer months."

According to the official, this situation could be considered, with the potential for a tax exemption for residents. However, she admits that "it must be seriously evaluated, taking into account the real impact on the internal market and the sustainability of the tourist tax itself."

Hence, AHP's stance on this matter has been quite critical. "We argue that, from a legal standpoint, tourist taxes should be provided for in the Local Finance Law, so that there can be rigorous criteria for both their creation and their application. Moreover, tourist taxes are a reality in many cities around the world where there is strong tourist pressure. What concerns us in Portugal is their widespread application, even in contexts that don't justify it," noting that "only in situations where it is necessary to offset this strong pressure can they be used as a management tool, alongside other measures, and always considering their potential impact on the competitiveness of destinations."

However, it recognizes that, "if they are effectively implemented, it is essential to guarantee total transparency in their management, ensuring that the funds collected are effectively reinvested in the sector – whether in tourism promotion, infrastructure improvements or territorial sustainability."

This isn't always the case, as the AHP believes that many municipalities lack scrutiny over how tourist tax funds are spent. "That is, these funds are included in the councils' general budgets and used for current or other general expenses. Therefore, we insist on the need for rigorous scrutiny and clear accountability from municipalities regarding, let's remember, these taxes, which municipalities claim are 'fees' and not taxes ," it emphasizes.

As a solution and to avoid these problems, Cristina Siza Vieira argues that it would be beneficial for city councils to publicly explain where and how they are using this money. "In fact, we believe that the tax is being viewed as just another tax revenue, with no direct connection to either the provision of services to tourists or the qualification of the destination. On the contrary, in these times, this tax could be an opportunity to communicate the positive impact of tourism to the resident community, helping to reduce the gap between what residents perceive and what tourists 'consider'," she admits.

Increase the pressure

It's true that many municipalities across the country charge tourist taxes, and almost all of them have already increased or plan to increase these amounts. According to AHP's calculations, there are currently more than 40 municipalities in Portugal that apply this tax.

Rates generally vary between one and four euros per night, per person, depending on the municipality. The periods during which the tax is applied, age limits, exceptions, etc. also vary. " This dispersion of criteria and amounts is, in itself, a problem. It creates inequalities between destinations and confusion for both operators and tourists ," warns Cristina Siza Vieira.

A trend that, according to the AHP vice-president, is likely to increase. " We are witnessing a growth trend—not only in the number of municipalities applying it, but also in the amount charged. What concerns us is that this growth is occurring without a national framework that regulates this matter coherently. Without such a framework, we run the risk of the tax being used by municipalities as an easy recipe, completely distorted from its original purpose," she emphasizes.

For example, Lisbon and Cascais are the municipalities that charge the most for this tax: four euros. Next come Porto (three euros) and Vila Nova de Gaia (2.5 euros).

Other municipalities, such as Braga, Coimbra, Sintra, Figueira da Foz, and several regions of the Algarve, charge between one and two euros. It's important to note that not all municipalities charge the same amount; some are seasonal, such as Figueira da Foz, which charges 1.5 euros between October and March and 2 euros between April and September.

Record numbers

The application of these taxes takes on new dimensions with the number of tourists arriving in Portugal, which, according to data from the National Statistics Institute (INE), will have reached 29 million in 2024, a figure that represents an increase of 9.3% compared to the previous year.

The Spanish market remained the main source of international tourists (24.7% share), having grown 7.5% compared to the previous year. The UK market (12.0% of the total) remained the second largest source market, growing 4.5%, followed by the French market (11.6% of the total), which grew 2.3%.

The data also shows that most tourist accommodations registered 34 million guests, providing 88.3 million overnight stays in 2024, corresponding to increases of 4.8% and 3.8%, respectively. The domestic market generated 32.3% of overnight stays in 2024, 28.5 million, 1.7% more than the previous year. External markets generated 59.8 million overnight stays, reflecting annual growth of 4.8%.

Overnight stays by non-residents accounted for 67.7% of overnight stays in most accommodations in 2024. This was the year since 2013 with the greatest dependence on international markets, surpassed only by 2017, when these markets accounted for 67.8% of the total. Compared to 2023, there was a 0.7 pp increase in dependence on external markets in terms of overnight stays.

Tourist trips by residents reached 22.9 million, a 3.2% decrease, driven by the dynamic nature of domestic travel, which decreased 4.7% compared to the previous year, reaching 19.5 million. Conversely, trips abroad increased 6.2% compared to 2023, reaching 3.4 million in 2024.

In 2024, average spending per tourist on each trip increased by 14.1% compared to 2023, reaching €276.6. For domestic trips, residents spent, on average, €176.7 per tourist/trip, up 7.5% compared to 2023. For international trips, average spending per tourist/trip grew by 14.6% in 2024, reaching €843.8.

What to expect this summer?

Hoteliers' forecasts for the upcoming summer are moderate, according to AHP, based on a recent survey. "Summer forecasts are generally positive, but still marked by some uncertainty, with only a third of the tourism establishments surveyed reporting more than half of their capacity already booked."

Commenting on this data, Cristina Siza Vieira confirms : "Expectations for the summer of 2025 are positive, but marked by caution." However, she adds, "there are encouraging signs, such as the rise in the average price per room and total revenue, and the growth of markets like the US, Canada, Nordic countries, and South Korea, which are gaining ground in the national landscape."

However, it warns of three "significant" challenges: " Limited airport capacity – with Lisbon practically full and Faro operating under constraints –, the effects of climate change, which may drive away certain types of tourists, and the unstable geopolitical context, which has a direct impact on consumer behavior."

In addition, the official recalls the most recent data from the European Commission showing that the Consumer Confidence Indicator in 2025 is around two points below the value recorded in 2024, "which indicates greater restraint in purchasing decisions and reinforces the need for even more careful management of the summer ahead."

What about Europe?

Amsterdam tops the list of European cities with the highest tourist taxes, charging 12.5% of the total booking value, in a strategy to manage overtourism and ensure that it directly contributes to public services and urban maintenance, reveals a study by Holidu.

Cities like Athens, Rhodes, and others in Greece are already implementing a climate resilience tax to support infrastructure and sustainable tourism. The tax is not uniform and varies depending on the type of accommodation and the time of year, with lower rates during the low season (November to March).

Milan, Rome, Florence, and Bologna in Italy also adjusted their taxes for 2025, with rates reaching 10 euros per night for luxury accommodations. In Berlin, the tax increased to 7.5%, reflecting a significant change in policy that applies to all stays, including business stays.

Funded projects

In Lisbon, the Lisbon Tourism Development Fund (FDTL) manages the financing of projects and activities using tourist tax revenue. Among the investments generated by these revenues are the Doca da Marinha (Navy Dock), the Estação Sul e Sueste (South and Southeast Station), the Museu Tesouro Real (Royal Treasury Museum), and the 25 de Abril Bridge Interpretive Center. The Web Summit is also partially funded by the FDTL.

In Cascais, the fees were applied to the restoration of buildings, events and exhibition halls, while in Sintra they were used to carry out projects, studies, equipment or infrastructure with a view to promoting sustainable tourism and the preservation of heritage.

In Porto, the fees are used to diversify the tourist offerings, with the creation of tourist blocks and new itineraries, to regulate and qualify the tourism sector with training activities for professionals and tourism agents, and to regulate the use of public spaces by street entertainers.

A different scenario applies to beach areas. For example, the funds raised in Póvoa de Varzim are intended to improve tourism-related facilities, such as access, signage, and public spaces. In Faro, however, they were used to strengthen tourism infrastructure.