Portugal’s government has drafted a bill to cut VAT on construction for own permanent housing to 6%, but the Portuguese Association of Chartered Accountants (OCC) deems the proposal unworkable due to its reliance on post‑construction third‑party checks. The bill would apply only to properties for own use with a sale value not exceeding €648,000, and would require contractors to issue zero‑VAT invoices with developers self‑assessing. OCC warns that the uncertainty could force builders to absorb the difference between 6% and the standard 23% rate.
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The post outlines Portugal’s VAT framework, highlighting the 23% domestic rate, the 0% international regime for services to non‑EU clients, and the reverse‑charge rule within the EU. It also discusses exempt sectors under Article 9, the 6% reduced rate for affordable housing, and the digitised 2026 recovery process for VAT credits.
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Key Takeaways
The bill proposes a reduced VAT rate of 6% (down from 23%) for qualifying construction projects.
The property must be for the acquirer’s own and permanent use, have a sale value not exceeding €648,000, and can be a new build or refurbishment, regardless of location.
Because it ties VAT application to post‑construction third‑party checks, creating uncertainty for builders and accountants and risking the need to pay the difference between 6% and 23% if conditions are not met.
Primary source
Read the full article at Essential BusinessThis summary was published on VATfaqs.com on 28 January 2026. It relates to VAT developments in Portugal. The original source is Essential Business.
