Portugal’s government has proposed a 6% VAT rate on construction and rehabilitation works for primary residences, targeting urban development projects initiated between September 2025 and December 2029. The measure applies to sales under €648,022 and rentals under €2,300/month, with specific timing and lease conditions, and includes amended reverse‑charge rules and potential VAT refunds for individuals.
The proposal sets a reduced VAT rate of 6% for qualifying construction and rehabilitation works, effective from 1 Jan 2026.
Only urban development projects initiated between 25 Sep 2025 and 31 Dec 2029, with tax liability from 1 Jan 2026, and sales under €648,022 or rentals under €2,300 per month.
The property must be sold as the buyer’s permanent residence within 24 months of the occupancy certificate issuance, or rented within the same period, with a lease lasting at least 36 months within the first five years after the certificate issuance.
The acquirer must self‑assess VAT even if only carrying out VAT‑exempt operations, and interest or penalties may apply if VAT is returned to the state.
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