Accounting for Construction Companies in Portugal
Specialist construction accounting in Portugal at HVR for 2026 is organised in three tiers: Small Contractor from €300/month (€300–500 band), Mid-Size Builder / Developer from €500/month (€500–900 band), and Construction Group / Public Works from €1,200/month (€1,200–2,500 band). Full command of the VAT reverse charge (Art. 2 CIVA), subcontractor IRS withholding (Art. 101 CIRS), 6% VAT Housing Package (Law 9-A/2026), progress measurement statements, RFAI, SIFIDE PropTech, the Public Contracts Code (CCP) and the building regulations (RGEU). Compliant with the Order of Accountants (OCC) and the Portuguese Tax Authority (AT).
Packages — Construction Accounting 2026
| Package | Monthly band | Who it's for | Includes |
|---|---|---|---|
| Small Contractor / Subcontractor | €300–500 from €300 | 1-5 employees, small-scale works | Reverse-charge VAT, 25% IRS withholding, payroll, INCI licence |
| Mid-Size Builder / Developer | €500–900 from €500 | 6-25 employees, mid-size projects | Everything + 6% Housing VAT, measurement statements, guarantees, RFAI, cost centres |
| Group / Public Works | €1,200–2,500 from €1,200 | 25+ employees, SPVs, joint ventures, CCP | Everything + part-time CFO, consolidation, performance bonds, CCP price revision, SIFIDE |
Prices exclude VAT. Final price set during a free assessment, based on the number of concurrent sites, subcontractors and tax complexity.
The complete tax framework for construction in Portugal
VAT reverse charge
The reverse-charge regime (autoliquidação), set out in Art. 2(1)(j) of the Portuguese VAT Code (CIVA), applies to construction services supplied between VAT-registered businesses in Portugal. The subcontractor issues an invoice with no VAT (bearing the note "IVA - autoliquidação"), and the acquiring contractor self-assesses and simultaneously deducts the VAT in its periodic return — so the transaction is cash-neutral on VAT for compliant businesses.
Applies to: construction works contracts (new build and renovation), supply of goods with fixed installation (window frames, HVAC, electrical installations), demolition, earthworks and associated services. It does not apply to the pure supply of materials without installation.
Subcontractor withholding tax (Art. 101 CIRS)
Self-employed subcontractors invoicing on the green-receipt regime (IRS Category B) are subject to withholding tax at source, depending on their activity:
- 25% for activities outside the schedule in Art. 151 CIRS (most construction trades);
- 16.5% for specific listed activities (engineers, architects);
- 11.5% for professions in the schedule taxed at the reduced rate.
The contractor pays the withholding to the Tax Authority (AT) by the 20th of the following month. Subcontractors that are companies (Lda. or single-member Lda.) are not subject to withholding. For foreign subcontractors, a Form 30 (Modelo 30) may also be required.
6% VAT — Housing Tax Package (Law 9-A/2026)
Since October 2025 (formalised in March 2026 by Law 9-A/2026), the construction and renovation of housing benefits from a reduced 6% VAT rate instead of 23%, until 31 December 2029, where it concerns:
- a primary residence (Habitação Própria e Permanente, HPP) with a construction value up to €660,982;
- property intended for residential letting with monthly rent up to €2,300;
- renovation works in Urban Rehabilitation Areas (ARU).
Self-builders (individuals) may instead claim a refund of 17% of the VAT incurred within 12 months of the building permit, as an alternative to purchasing at the 6% rate.
Progress measurement statements and project accounting
Progress measurement statements (autos de medição) are monthly documents validated by the client or an external site supervisor that record the physical progress of the works and support invoicing. Each statement sets the percentage of completion to be invoiced that month. In the accounts they are recorded as:
- Account 35 — Work in Progress: at each year end, for projects still open at the balance-sheet date;
- Account 71 — Sales and services rendered: as validated statements are invoiced;
- Account 37 — Customer advances: for deposits and advance payments received.
HVR reconciles measurement statements with the accounts automatically, without double bookkeeping.
CCP — Public Contracts Code (public works)
Works contracts for public bodies follow the Public Contracts Code (Decree-Law 18/2008, as amended), with specific features:
- Quarterly price revision indexed to official formulas published by IMPIC;
- 5% retention as a performance guarantee, released after final acceptance;
- Mandatory performance bond or first-demand bank guarantee;
- Invoicing to the public body under reverse-charge or standard VAT, depending on the case.
Tax incentives for construction in 2026
| Incentive | Benefit | Applies to |
|---|---|---|
| 6% VAT Housing Package (Law 9-A/2026) | 17% saving on total cost | HPP works up to €660,982, letting up to €2,300/month |
| RFAI — Investment Support Tax Regime | Up to 30% tax credit on CAPEX | Investment in eligible regions (North, Centre, Alentejo, Azores, Madeira) |
| SIFIDE II — R&D in construction | 32.5%–82.5% of R&D spend | BIM, sustainable construction, PropTech, new materials |
| 5% IRS on ARU rents | Replaces the standard rate for 5 years | Properties renovated in ARU |
| IMT/IMI exemption, 3 years ARU | Zero IMT on purchase + IMI exempt for 3 years | Properties to be renovated in ARU |
| ICE (Art. 41-A CIRC) | 4.5% deduction on increases in equity | Construction firms reinforcing share capital |
Sector-specific obligations for construction firms
Beyond the general tax obligations (VAT, corporate income tax IRC, the IES annual return and the Modelo 22 tax return), construction companies in Portugal must also handle: a valid INCI/IMPIC licence (alvará) for the relevant category and subcategory; the monthly remuneration declaration (DMR) extended for construction-sector levies; mandatory insurance (public liability, workers' compensation and contractors' all-risks); RGEU (General Regulation for Urban Buildings) compliance; Form 30 for foreign subcontractors; and performance bonds and bank guarantees for public works under the CCP. HVR coordinates all of these alongside the day-to-day accounting.
Related reading: Accounting for Real Estate | Fiscal Representative in Portugal | Get a NIF in Portugal