The changes and extensions are set to take effect on January 1, 2026, as they are included in the 2026 State Budget (OE2026), which was approved on Thursday in a final global vote and is awaiting promulgation by the President of the Republic, Marcelo Rebelo de Sousa.
From fertilizers to olive oil production and game meat, the lists of goods with special VAT rates will change starting next year.
Here are the five main approved measures:
- 6% VAT on olive oil production
As of January 1, the date when the budget is expected to come into force, olive oil production will be subject to a 6% VAT rate instead of the current 23%.
This change was already included in the original version of the budget proposal presented by the government of Luís Montenegro on October 9 and was approved in plenary.
List I annexed to the VAT Code – which enumerates goods and services taxed at the reduced rate of 6% – will now include “the operations of transforming olives into olive oil.”
Olive oil itself is already taxed at the 6% VAT rate, as is olive pomace, extracted during olive oil production.
- VAT exemption for fertilizers
Current VAT exemptions for those purchasing fertilizers, soil correctives, flour, cereals, and seeds used in agricultural production activities have been extended for another year, until December 31, 2026.
The legislation ensures that these operations continue to provide “the right to deduct the tax levied on goods or services acquired, imported, or used by the taxpayer for their operations.”
This is an extension of a special measure for agricultural production, introduced by the government of António Costa in April 2022 to respond to rising fuel prices, and which remained in effect not only in that year but also in 2023, 2024, and 2025.
With the extension to 2026, support to farmers will last more than four and a half years.
This measure was proposed by the PSD and CDS-PP parliamentary groups.
- 6% VAT on art galleries
Starting January 1, 2026, sales of artworks in art galleries will be subject to a 6% VAT rate instead of the current 23%.
Parliament approved two proposals, from PS and Chega, aiming for the same goal, ensuring a tax reduction, switching from the normal to the reduced rate.
The European directive regulating the special taxation regime for second-hand goods, artworks, collectibles, and antiques, which Portugal partially transposed into national law this year, already allowed a 6% VAT rate for galleries, but national legislation did not ensure the application of this reduced rate.
Currently, the reduced rate (6%) is only applied when the transaction is conducted by artists or rights holders.
- 6% VAT for game meat
Also starting on January 1, the VAT on game meat sales will drop from 23% to 6%.
This is a proposal from PSD and CDS-PP. In their reasoning, the parties noted that “meats and edible offals, fresh or frozen,” of various species are already taxed at the reduced rate (6%), but that the rule “unjustifiably excludes big and small game meat, keeping it subject to the normal rate of 23%.”
The parliamentary groups presented this tax reduction, arguing it will stimulate the commercialization of game meat in the country.
Currently, they mention, “all big game meat slaughtered in Portugal is immediately transported to Spain, where it is processed, packaged, and marketed, without generating any tax revenue for our country,” returning to the Portuguese market as a final product “leaving all the added value associated with the value chain, from processing to marketing, in Spain.”
- VAT exemption on pet food
The current VAT exemption “on the acquisition of pet food by legally constituted animal welfare associations” will remain in place for another year, until December 31, 2026.
This extension is due to a proposal from PAN that extends the rules of Article 4 of Law No. 10-A/2022, of April 28, by another year, the same legislation from which the fertilizer VAT exemption was created during the inflation spike following Russia’s invasion of Ukraine.
PAN justified the extension with the need to support animal welfare associations in coping with the “increase in the cost of living,” allowing them to direct resources toward “feeding, caring for, and sterilizing the animals they host, contributing to population control” and “reducing abandonment.”
