“We believe that by the first quarter of next year, we will have the VAT at 6% for projects starting after this date, completed, but it will also depend a lot on this house, on the process of discussion and approval,” stated Miguel Pinto Luz, who is being heard in parliament in the context of the detailed discussion of the State Budget for 2026 (OE2026).
The official explained that a joint effort is being made with the Ministry of Finance to prepare the proposal that must be sent to parliament.
Last week, Finance Minister Joaquim Miranda Sarmento said he expects the “great effect” of reducing the construction VAT from 23% to 6% to appear only from 2027, as the impact is not immediate.
At the Budget, Finance, and Public Administration Committee (COFAP), Joaquim Miranda Sarmento explained that the 6% VAT will apply “to new projects submitted to the councils,” which will occur “when the law comes into effect,” expected in 2026. However, he stressed that the effect will not be immediate.
“The great effect will begin to be felt in 2027, due to this ‘delay’ between the presentation of projects, their approval, and the start of construction,” he noted.
The Prime Minister announced on September 25 that the Government will propose to parliament a reduction in the VAT rate to 6% for the construction of houses for sale up to 648,000 euros or, in the case of houses intended for rental, with rents up to 2,300 euros.
This tax regime will be in force until 2029, said the head of Government at the time.
Luís Montenegro admitted that the reduced VAT for the construction of houses for rent up to 2,300 euros might sound “a bit high,” but argued that it is “a maximum ceiling” aimed at covering the construction of houses for families in high-pressure areas, such as the Lisbon Metropolitan Area and Porto.
The measure is part of the “Build Portugal – Renting and Simplification” package, designed to strengthen the supply of affordable housing, integrating measures in conjunction with the Recovery and Resilience Plan (PRR).
The bill for the VAT reduction has not yet been submitted to parliament, nor is it part of the OE2026 initiative.
