Would you like to let out your property in Cape Verde as short-term accommodation? Find out what the law says

Tourist rentals in Cape Verde have been gaining prominence as an attractive business opportunity, particularly for companies wishing to tap into the growing tourism sector. With the entry into force of the Decree-Law No. 56/2024, On 13 November, the Cape Verdean Government established a robust legal framework to regulate private accommodation, including villas, flats and rooms intended for short-term lets, which are often advertised via digital platforms such as Airbnb and Booking. This legislation aims to formalise the sector, combat informality and ensure fair competition, protecting both operators and consumers.

The new law requires all properties intended for short-term lettings to be duly licensed, and expressly prohibits operation without authorisation. Furthermore, it introduces specific limits, such as a maximum stay of 90 consecutive days, and excludes properties that fall within the scope of traditional tourist developments. To operate legally, it is mandatory to register online with the relevant authorities and to undergo a preliminary inspection in order to obtain the definitive licence. Further details on this regulation can be found at official website of the Government of Cape Verde.

From a tax perspective, holiday rentals are subject to a specific tax regime, which includes the payment of taxes such as the Corporate Income Tax (IRPC) and Property Tax (IPI), recently regulated by the Law No. 55/X/2025. These tax obligations apply to both companies and individuals engaged in this type of activity. The requirement to submit tax returns electronically, via portals accredited by the General Directorate of Contributions and Taxes, promotes modernisation and transparency in the fulfilment of tax obligations.

This legal and fiscal framework comes at a time of strong growth in tourism in Cape Verde, which welcomed more than 1.17 million tourists in 2024, moving closer to the target of 1.2 million by 2026. The regulation of private accommodation not only promotes the quality and diversification of the tourism offering, but also encourages small investors and businesses to participate in the sector, contributing to the country’s sustainable economic development.

Legal Requirements for Tourist Accommodation in Cape Verde

Compulsory Licensing for Private Accommodation

To operate a tourist accommodation in Cape Verde, a licence is required and is regulated by Decree-Law No. 56/2024 of 13 November. This legislation stipulates that all properties intended for short-term rentals, such as villas, flats and rooms, must be registered with the local municipal council. This process aims to ensure compliance with national tourism standards and to combat informality in the sector.

The key steps in the licensing process include:

1. Choosing a Corporate Structure: The owner must decide whether to operate as a sole trader or to set up a company, such as a private limited company. This step is crucial in determining the legal and tax liability of the business.
2. Registration with the Registry Office and the Chamber of Commerce: The company name must be registered with the Chamber of Commerce, at a cost of approximately CVE 20,000. This process can be completed within two working days.
3. Business Licence and Municipal Licence: It is necessary to obtain a specific business licence for the hospitality sector, in addition to a local authority licence, particularly in towns such as Praia. (Forbes Lusophone Africa).
4. Social security registration: Both the company and its employees must be registered with the national social security system.
5. Preliminary Inspection: Before the final licence is issued, the property must undergo an inspection to verify compliance with health, safety and building standards. (Forbes Lusophone Africa).

Tax and Fiscal Requirements

Cape Verdean legislation requires operators of tourist accommodation to comply with their tax obligations, including the payment of taxes and the issuing of invoices. Decree-Law No. 56/2024 introduced specific measures to formalise the sector, including:

1. Single Income Tax (IUR): Income from holiday lettings is subject to the IUR. The rate varies depending on the chosen legal structure and the amount of revenue.
2. Value Added Tax (VAT): Depending on their annual turnover, traders may be subject to VAT. The Special Unified Tax Regime, for example, applies to micro and small businesses, with a flat rate of 4% on the gross value of sales. (CV Consultancy).
3. Stamp Duty: This tax applies to contracts and transactions relating to holiday let activities.
4. Social Security Contributions: Employers are obliged to make Social Security contributions on behalf of their employees, thereby ensuring social protection for workers.
5. Tourist Tax: In Cape Verde, it is common practice to charge a tourist tax per night’s stay, which must be collected by operators and paid to the relevant authorities.

Online Registration Requirements and Digital Platforms

The new legislation also regulates the use of digital platforms such as Airbnb and Booking to promote holiday accommodation. Operators are required to:

1. Online Registration with the Competent Authority: All accommodation must be registered on an online platform managed by the Cape Verde Tourism Institute. This registration enables the monitoring of activity and ensures compliance with legal requirements. (Island Express).
2. Transparency on Digital Platforms: Advertisements must include the accommodation’s licence number, assuring consumers that the property is properly registered.
3. Maintenance of Guest Registers: Operators must keep detailed records of guests, including their identification details and the length of their stay, for monitoring and security purposes.
4. Payments and Tax Returns: Income generated via digital platforms must be declared to the tax authorities to ensure compliance with tax obligations.

Health, Safety and Quality Standards

Decree-Law No. 56/2024 introduces strict requirements to ensure the quality and safety of tourist accommodation. These include:

1. Compliance with Building Standards: Properties must comply with local building regulations, including accessibility for people with reduced mobility.
2. Safety Equipment: It is compulsory to have equipment such as fire extinguishers, smoke alarms and first-aid kits.
3. Hygiene and Cleanliness: Operators must ensure high standards of hygiene and cleanliness, particularly in communal areas and toilet facilities.
4. Staff Training: Staff involved in running the accommodation must receive appropriate training in hospitality and safety.
5. Quality Certification: The Cape Verde Tourism Institute may issue quality certificates to accommodation providers that exceed the minimum requirements, thereby encouraging continuous improvement within the sector.

Penalties for Non-Compliance

Failure to comply with legal requirements may result in significant penalties, including:

1. Fines: Fines vary according to the severity of the offence and may exceed 500,000 CVE in the event of a repeat offence.
2. Closure of the Premises: The authorities may order the closure of accommodation establishments that operate without a licence or that do not comply with legal requirements.
3. Criminal Liability: In cases of tax fraud or breaches of safety regulations, operators may face criminal proceedings.
4. Suspension of Advertisements on Digital Platforms: Platforms such as Airbnb may remove listings for properties that are not properly licensed or that breach the terms of service.

This legal and fiscal framework reflects Cape Verde’s commitment to promoting a sustainable and competitive tourism sector, whilst ensuring consumer protection and the formalisation of economic activities. (Forbes Lusophone Africa).

Tax and Fiscal Obligations for Businesses in the Accommodation Sector

Taxation of Business Income

Companies operating in the tourist accommodation sector in Cape Verde are subject to the Single Income Tax (IUR), which is levied on profits derived from business activities. This tax varies according to the company’s legal structure and the level of annual turnover. Larger companies, such as limited companies, are taxed on a progressive scale, whilst micro and small businesses may opt for the Unified Special Tax Regime, which applies a flat rate of 4% on gross sales turnover. This simplified scheme is particularly advantageous for traders wishing to avoid the complexity of detailed accounting. (Forbes Lusophone Africa).

Furthermore, Decree-Law No. 56/2024 introduced a requirement to declare income from digital platforms such as Airbnb and Booking, ensuring that the revenue generated by these activities is properly taxed. Companies that fail to comply with these obligations may face severe penalties, such as fines and the suspension of their activities.

Value Added Tax (VAT)

O Value Added Tax (VAT) It applies to companies that exceed the annual turnover threshold set by Cape Verdean legislation. This tax is levied on services provided, including short-term lettings. However, companies falling under the Special Unified Tax Regime are exempt from VAT, provided they meet the eligibility criteria.

The application of VAT in the tourist accommodation sector aims to ensure fair competition between formal and informal operators, whilst promoting tax transparency. Businesses operating under the standard VAT regime must issue detailed invoices and keep accurate accounting records, as required by law. (Island Express).

Stamp Duty and Additional Charges

O Stamp Duty It applies to contracts and transactions relating to tourist accommodation, such as tenancy agreements and agreements with digital platforms. This tax is calculated on the basis of the value of the contract or transaction and must be paid when the document is formalised.

Furthermore, companies operating in the sector are subject to Tourist Tax, which is charged directly to guests and subsequently passed on to the government. In 2022, Cape Verde collected 4.7 million euros from this tax, demonstrating its importance as a source of revenue for the country. Proper management of this tax is essential to avoid tax penalties.

Registration and Tax Reporting Obligations

Businesses in the tourist accommodation sector must strictly comply with their registration and tax reporting obligations. This includes:

• Registration with the Tax Authority: All companies must be registered with the Cape Verdean tax authority in order to obtain a tax identification number (NIF). This registration is compulsory for issuing invoices and paying taxes.
• Income Tax Return: Companies must submit periodic income returns, detailing their revenue and the tax due. Failure to comply with this obligation may result in fines and other penalties.
• Maintenance of Accounting Records: It is compulsory to keep detailed accounting records, including income, expenditure and financial transactions. These records must be available for inspection by the tax authorities.

Use of the platform Tourism Information Management System (SGIT), introduced by the Cape Verde Tourism Institute, makes it easier to comply with these obligations by enabling online registration and the submission of tax returns. (Island Express).

Penalties for Tax Non-compliance

Failure to comply with tax and fiscal obligations may result in severe penalties, including:

• Administrative Fines: Fines vary according to the severity of the offence and may exceed 500,000 CVE in the event of a repeat offence.
• Suspension of Activities: Companies operating without a licence or failing to meet their tax obligations may have their activities suspended by the relevant authorities.
• Criminal Liability: In cases of tax fraud or tax evasion, those responsible may face criminal proceedings, with penalties including additional fines and imprisonment.
• Suspension on Digital Platforms: Platforms such as Airbnb may remove listings for properties that are not properly licensed or that do not comply with tax obligations. (Forbes Lusophone Africa).

This legal and fiscal framework reflects Cape Verde’s commitment to promoting the formalisation of the tourist accommodation sector, ensuring fair competition and consumer protection.

The Impact of the New Legal Framework on Tourism and the Cape Verdean Economy

Formalisation of the Sector and Attracting Investment

Decree-Law No. 56/2024 introduced significant changes to the short-stay accommodation sector in Cape Verde, promoting the formalisation of tourist rental activities. The requirement for online registration and a licence to operate legally (Forbes Lusophone Africa) aims to attract foreign and domestic investment by creating an environment of greater legal certainty for operators.

By aligning itself with international practices, Cape Verde is becoming more competitive in the global tourism market, encouraging investors to explore new opportunities in the sector. Formalisation reduces informality, which previously dominated the market, and ensures that operators contribute to the economy through the payment of taxes and levies, such as the tourist tax and the Single Income Tax (IUR).

This approach also promotes the diversification of the tourism offering, through the development of new types of accommodation that meet the quality and safety requirements laid down by the new legislation (Island Express).

Consumer Protection and Fair Competition

The new legislation establishes mechanisms to protect consumers and ensure fair competition in the tourism market. The requirement for a prior inspection to obtain licences ensures that accommodation meets minimum quality and safety standards. Furthermore, compulsory registration on digital platforms such as Airbnb and Booking ensures greater transparency and reliability for tourists (Diário Económico).

The stepped-up enforcement provided for in the Decree-Law aims to combat unfair practices, such as the operation of unauthorised accommodation, and to ensure that all operators comply with the same rules. This more balanced regulatory environment benefits both consumers, who have access to higher-quality services, and formal operators, who do not face unfair competition from informal businesses.

Direct and Indirect Economic Impact

The supplementary accommodation sector, which has seen significant growth in recent years, is an important source of revenue for the Cape Verdean economy. In 2022, the tourist tax generated 4.7 million euros in revenue, a figure that is expected to rise as the sector becomes more formalised (Publituris Hospitality).

Furthermore, the regulations encourage the creation of direct and indirect jobs in the tourism sector, ranging from maintenance and cleaning services to transport and leisure-related activities. The modernisation of procedures, such as the use of digital technologies for registration and monitoring, also promotes administrative efficiency and reduces operational costs for the government.

In the long term, the economic impact of the regulations may be seen in an increase in the country’s Gross Domestic Product (GDP), driven by sustainable growth in tourism. This sector, which already accounts for a significant share of the Cape Verdean economy, has the potential to become even more robust with the implementation of the new rules.

Promoting Sustainability and Regional Development

Another significant impact of the new legal framework is the promotion of sustainability and regional development. The diversification of the tourism offering, encouraged by the regulations, boosts tourism in less developed areas, contributing to a more equitable distribution of economic benefits across the whole country.

Furthermore, the requirement to comply with building and safety standards, including accessibility for people with reduced mobility, promotes more inclusive and sustainable practices. The Cape Verde Tourism Institute also highlights the importance of modernising tourism information management systems, which use digital technologies to improve efficiency and transparency within the sector (Island Express).

Challenges and Adaptation by Operators

Despite the benefits, the implementation of Decree-Law No. 56/2024 presents significant challenges for informal operators, who are now required to adapt quickly to the new legal requirements. The transition to the formal sector can be costly, particularly for small property owners who rely on holiday rentals as their main source of income.

The costs associated with licensing, inspections and compliance with safety standards can present an initial hurdle for many operators. However, the Cape Verdean government has been promoting initiatives to support the transition, such as simplifying the registration process and offering tax incentives to operators who register within the stipulated timeframe.

On the other hand, rigorous enforcement and severe penalties for non-compliance with the regulations – such as fines and the suspension of activities – reinforce the need for compliance. Collaboration between the public and private sectors will be essential to overcoming these challenges and ensuring the success of the new regulations.

Conclusion

Decree-Law No. 56/2024 has brought about a significant transformation in the holiday rental sector in Cape Verde, establishing a robust legal and fiscal framework that promotes the formalisation and sustainability of the activity. The requirement for licensing, online registration and compliance with strict health, safety and quality standards aims to combat informality, ensure consumer protection and create conditions for fair competition amongst operators. This legal framework also encourages the diversification of tourism provision and attracts investment, positioning Cape Verde as a competitive destination in the global market.

In the tax sphere, the introduction of schemes such as the Unified Special Tax Regime and the taxation of revenue generated by digital platforms, such as Airbnb e Booking, ensures greater transparency and helps to increase public revenue. The levying of taxes such as the Single Income Tax (IUR), o VAT and Tourist Tax reinforces the government’s commitment to formalising the sector and redistributing economic benefits. However, the transition to the formal sector presents challenges, particularly for small-scale operators, who face high start-up costs and the need to adapt to new requirements.

The implementation of this legal framework represents a strategic step towards the sustainable growth of tourism in Cape Verde, with positive impacts on Gross Domestic Product (GDP), job creation and regional development. However, to ensure the success of this initiative, collaboration between the public and private sectors will be essential, as will the provision of technical support and tax incentives to help operators adapt to the new rules. This regulatory model not only strengthens the tourism sector but also contributes to the modernisation and competitiveness of the Cape Verdean economy in the long term.