Building or refurbishing for housing has become far lighter in tax terms. The housing tax package cut the VAT on construction and refurbishment works for residential property from 23% to 6%. For developers, investors and those refurbishing, it is an incentive with a direct impact on the bottom line of the operation.
What changes
The VAT rate on construction and refurbishment works for residential property becomes 6% (instead of 23%), on a temporary basis — guaranteed until 31 December 2029. The measure covers property intended for sale (up to a reference value of around €660,982) or for letting (with rent up to €2,300/month).
The link to affordable rental
The same package created the Simplified Affordable Rental Regime, promoting supply at moderate rents by setting maximum limits per typology referenced to around 80% of the median rent per municipality published by INE. The tax incentive and affordable rental thus work as an articulated package: you build or refurbish with reduced VAT and place the property on the market at a framed rent.
Who it benefits
Developers, investors and owners who refurbish to rent or sell. In a refurbishment operation, the gap between 23% and 6% VAT on the works can completely change a project’s viability — provided the operation is correctly framed (intended use of the property, reference values, contracts and invoicing).
The precautions to take
The benefit requires rigour: the intended use of the property must match the law, the values and deadlines must be respected, and the documentation (works contracts, invoicing, allocation to rental) organised to support the framing before the Tax Authority. This is where upfront legal and tax structuring avoids later corrections.
Building or refurbishing for housing? Paulo Silva Silva, Lawyer, structures the operation and coordinates the tax framing with your accountant, so the incentive is used with certainty. Book a meeting or contact geral@advpaulosilvasilva.com · +351 916 055 901.
This article is general in nature and does not constitute legal advice. Decree-Law no. 97/2026, of 20 May, the reference values and conditions of application should be confirmed in the version in force in the Diário da República before any decision.