The AICCOPN states that “the government must address this issue temporarily until the measure is fully implemented, to prevent the postponement or cancellation of several previously planned investments,” in a note from its president, Manuel Reis Campos.
“As this is a fiscal matter subject to parliamentary approval,” the association’s leader urges the government to “promptly implement a fiscal regime that boosts construction and rehabilitation without jeopardizing ongoing investments.”
Highlighting the reduction of VAT in construction as “a very important incentive” and “vital for increasing housing supply,” the AICCOPN president emphasizes that the fiscal regime in the sector is “broader” than this measure alone.
“AICCOPN has consistently advocated for the clarification of the scope of application of Article 2.23 of List I of the VAT Code, by issuing a transitional rule,” he explains.
This rule allows for the reduced VAT rate of 6% to be applied to urban rehabilitation contracts for properties or public spaces located in Urban Rehabilitation Areas (ARU).
The Portuguese Real Estate Developers and Investors Association (APPII) also views the VAT reduction from 23% to 6% as a “key component” of the “real fiscal shock” needed to address the housing crisis.
The APPII has maintained “regular contact” with parliamentary groups that sought the sector’s input, as well as “frequent contact with the ministry overseeing the sector,” informs a note from its CEO, Manuel Maria Gonçalves.
In addition to lowering VAT in construction, the APPII supports other measures such as the “simplification and digitalization of urban planning licensing processes,” the “allocation of public land for construction at controlled costs,” and “stability and predictability in legislative and fiscal policy for real estate promotion.”
In response to Infrastructure and Housing Minister’s announcement on Friday that the reduced VAT rate of 6% will be effective until the first quarter of 2026, APPII’s CEO, Manuel Maria Gonçalves, called for the measure’s swift implementation.
Manuel Gonçalves remarked that the worst outcome would be if housing construction in Portugal halts in the coming months while awaiting the VAT reduction’s enforcement.
He emphasized the urgent need for a “faster consensus” to accelerate new housing construction in Portugal.
“We believe that by the first quarter of next year, we will have the VAT at 6% for projects starting after this date, but this will also greatly depend on this house, the discussion process, and approval,” stated Miguel Pinto Luz on Friday during the parliamentary discussion on the State Budget for 2026 (OE2026).
The Prime Minister announced on September 25 that the government will propose to parliament a reduction of the VAT rate to 6% for the construction of houses for sale costing up to 648,000 euros or, in the case of rental homes, with rents up to 2,300 euros.
This fiscal regime will be in effect until 2029, said the head of government.
The measure is part of the “Building Portugal – Rental and Simplification” package, designed to boost the supply of affordable housing, including measures aligned with the Recovery and Resilience Plan (PRR).
The bill to reduce VAT has not yet been submitted to parliament and is not included in the OE2026 initiative.
