Following the announcement by the Minister of Infrastructure and Housing that the 6% VAT rate on construction will be implemented by the first quarter of 2026, Manuel Gonçalves emphasized the need for more “urgency” in applying the measure.
“In the worst case scenario, we will have to wait six months for the measure’s implementation, until the end of the first quarter of next year. That is the worst that can happen because nothing will progress until then,” he explained.
Highlighting that “the market will halt” and “wait” for the reduction, which represents a 17-point decrease in the VAT rate for housing construction (from the current 23% to 6%), the president of APPII stressed the necessity for “quicker consensus” to avoid stagnation in new housing construction.
Manuel Gonçalves also praised the “investment” the Minister of Infrastructure and Housing is making in this area, but reiterated that the VAT reduction “needs to happen as soon as possible.”
“We believe that by the first quarter of next year, we will have the VAT at 6% for projects entering after this date, completed, but it will also largely depend on this house, on the discussion and approval process,” stated Miguel Pinto Luz, who was heard today in parliament during the special discussion of the State Budget for 2026 (OE2026).
The minister explained that a joint effort is underway with the Ministry of Finance in preparing the proposal that must be sent to parliament.
Last week, the Minister of Finance, Joaquim Miranda Sarmento, projected that the “major effect” of the VAT reduction from 23% to 6% in construction will only emerge from 2027, as the impact is not immediate.
In the Budget, Finance, and Public Administration Committee (COFAP), Joaquim Miranda Sarmento explained that the 6% VAT will apply “to new projects entering the councils,” which will occur “once the law takes effect,” expected in 2026. However, he stressed, the impact will not be immediate.
“The major effect will start to be felt in 2027, due to this ‘delay’ between project presentation, approval, and the start of construction,” he noted.
The Prime Minister announced on September 25 that the Government will propose to parliament the reduction of the VAT rate to 6% for house construction for sale up to 648,000 euros or, in the case of houses for rent, with rents up to 2,300 euros.
This tax regime will be in effect until 2029, stated the head of Government.
The measure is part of the “Building Portugal – Rent and Simplification” package, designed to strengthen the supply of affordable housing, integrating measures in coordination with the Recovery and Resilience Plan (PRR).
The VAT reduction bill has not yet been submitted to parliament and is not part of the OE2026 initiative.
