Portugal has introduced a 6% VAT rate for the construction of homes intended for sale or rent at moderate prices, but the measure is restricted by EU regulations to owner‑occupied homes up to €684,000 and rentals up to €2,300 per month. The new law, published on 6 March 2026, gives the government 180 days to approve the relief, and accompanying decrees also lower income tax for rentals, exempt capital gains on reinvested profits, and impose a 7.5% transfer tax on non‑resident buyers.
A 6% VAT rate applies to construction of homes intended for sale or rent at moderate prices (up to €660,982 sale or €2,300 rent per month) from 6 March 2026.
Owner‑occupied homes priced above €684,000 and rentals above €2,300 per month are excluded, as limited by EU Commission regulations.
It reduces the IRS rate for rentals up to €2,300 per month from 25% to 10% effective 26 March 2026.
A 7.5% transfer tax is imposed on non‑resident purchasers of homes, effective 26 March 2026.
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Essential Business · about 1 month ago
Portugal’s Parliament has approved a 6% VAT rate on new residential housing construction for primary permanent residences, effective 1 January 2026. The measure applies to projects with procedural initiatives between 25 September 2025 and 31 December 2029, and includes conditions on residence duration and penalties for non‑compliance. Self‑build projects and investment contracts for lease also benefit from partial VAT refunds.
Bloomberg Tax · about 1 month ago
The article examines how transfer pricing adjustments can trigger VAT when they are considered payment for goods or services, citing the recent Stellantis Portugal Advocate General opinion. It highlights the need for multinationals to conduct structured reviews, document economic rationale, and maintain evidence to mitigate VAT risks, especially in finance and insurance sectors.
Bloomberg Tax · about 1 month ago
Bloomberg Tax’s commentary discusses how transfer pricing adjustments can create VAT exposure, citing recent ECJ cases and a Stellantis Portugal Advocate General opinion. It explains that adjustments tied to specific goods or services may be subject to VAT, while purely profit‑based adjustments may not. The article advises multinationals to conduct structured reviews and maintain documentation to mitigate risks.
Bloomberg Tax · about 1 month ago
The Advocate General opinion in the Stellantis Portugal case highlights uncertainty over whether transfer pricing adjustments constitute separate supplies of services and thus trigger VAT. The article reviews recent ECJ cases, outlines the need for structured VAT reviews, and stresses the importance of documentation for multinationals, especially those in finance and insurance sectors.
Essential Business · about 2 months ago
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.
Bloomberg Tax · 2 months ago
A non‑binding opinion from an EU Court of Justice adviser clarifies that Stellantis Portugal SA’s practice of adjusting sales prices for dealerships does not constitute a service and therefore is not subject to VAT. The opinion adds to a growing body of guidance on VAT treatment of transfer‑pricing adjustments and highlights the European Commission’s focus on closing the €128 billion VAT gap reported in 2023.
