VAT in Construction in 2026: What Changes with the Housing Tax Package
By Hugo Ribeiro, Certified Accountant · Member of the Order of Certified Accountants · HVR Business Consulting
VAT in Construction in 2026: What Changes with the Housing Tax Package By Hugo Ribeiro , Certified Accountant · Member of the Portuguese Association of Certified Accountants (OCC) · HVR Business Consulting · Published: April 2026 The 2026 Housing Tax Package, approved in parliamentary committee on 18 February 2026 and promulgated by the President of the Republic on 3 March 2026, introduces the biggest tax change in the construction sector in decades: the VAT rate drops from 23% to 6% on construction and renovation contracts for primary and permanent residence (HPP) up to €660,982 or rental hou…
FAQ
Is the 6% VAT rate on construction already in force?
Yes. The Housing Tax Package was approved by Parliament on 18 February 2026, promulgated on 3 March 2026. Retroactive from October 2025.
Which works are covered by the 6% VAT?
Construction or renovation contracts for HPP up to €660,982 or rental up to €2,300/month.
What happens if the property is not used as HPP?
The buyer faces a 10 IMT percentage point penalty.
How does the VAT refund for self-builds work?
Request within 12 months of occupancy licence. AT refund in 150 days.
Does the IMT exemption apply to any land purchase?
No. Only for land intended for HPP or affordable rental construction.