At issue is the reduction in VAT to 6% in construction, which will only be applied in 2026. “In the worst case scenario”…
The first announcement was made in September, by the Prime Minister: the reduction of the VAT rate to 6% for construction of houses for sale up to 648,000 euros; or, in the case of houses intended for rent, with rents of up to 2,300 euros.
Last Friday, an addition from the Minister of Housing: “We believe that by the first quarter of next year, we will have VAT at 6%, for projects that are completed after that date, but it will also depend a lot on this house, on the discussion and approval process”.
Miguel Pinto Luz, Minister of Infrastructure and Housing, was speaking at the Assembly of the Republic as part of the discussion on the State Budget for 2026.
And announced that the entry into force of the 6% VAT rate in construction (instead of the current 23%) will be in force until the first quarter of 2026.
Miguel Pinto Luz told deputies that joint work is being done with the Ministry of Finance to prepare the proposal that must be sent to parliament.
The Minister of Finance, Joaquim Miranda Sarmento, had said that the “great effect” reduction in VAT only arises from 2027, because the impact is not immediate.
The Portuguese Association of Real Estate Developers and Investors (APPII) calls for greater “urgency” in the application of this measure.
President Manuel Maria Gonçalves warned that the House construction could be stopped for six months waiting for VAT to fall.
“In the worst case scenario, we will have to wait six months for the measure to be implemented, until the end of the first quarter of next year. It’s the worst that can happen because nothing will move forward until then”, he explained, at the Lusa agency.
“The market will stop” for half a year and “wait” for the declinehighlighted Manuel Gonçalves. Therefore, he hopes for a “faster consensus” to avoid a stop in the construction of houses.
Pedro Sousa Carvalho even understands promoters and investors: “They are right. From the point of view of financial rationality, it doesn’t make sense to be building a house in the next six months when it will be cheaper in six months.”
Thus, continues the economist in , “the temptation for all contractors and promoters – and in a completely legitimate way – will be andpush all works until after March next year” to benefit from this significant reduction of 17 percentage points in tax.
Pedro suggests that the Government either should not have announced this deadline, or announced it but the measure would have to be applied now.
