Did you know you can benefit from a reduced 6% VAT rate for renovation works in Portugal?

One of the greatest tax advantages in the Portuguese real estate sector is the possibility of applying a reduced VAT rate of 6% to certain types of works. This benefit can significantly reduce the total cost of your renovation or construction project.

When does the reduced 6% VAT apply?
- Renovation works on properties located in Urban Rehabilitation Areas (ARU), officially recognised by the City Council.
- Conservation, improvement, or rehabilitation works on buildings or residential units.
- Construction of a primary residence, when contracted directly by the owner for their own use.

Legal basis
This reduction is established in the Portuguese VAT Code, List I, item 2.23 of the attached table, and regulated by Decree-Law No. 159/2014, which defines tax incentives for urban rehabilitation.

Why is this measure important for you as an investor or property owner?
- Reduces the total cost of the work, improving the financial viability of your project.
- Stimulates urban rehabilitation, adding value to central and historic areas.
- Increases the profitability of your investment, whether for resale or rental.

If you are planning to build or renovate a property in Lisbon or anywhere in Portugal, it is crucial to understand the requirements to benefit from the reduced VAT rate and maximise your investment returns.

💬 Would you like to know if your project is eligible for the reduced VAT rate?

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