Portugal – More Housing – VAT on ongoing rehabilitation work

© Estudio Pedrita

2 brief notes on “Mais Habitação” law (which literal translation is “More Housing“) and the 6% VAT rate on urban rehabilitation (item 2.23 of List I of the PT VAT Code)


1. The concept of “urban rehabilitation construction work” is  replaced by  “building rehabilitation construction work


In practice this excludes new construction in urban rehabilitation areas (know as “ARU”) from the reduced VAT rate (except in the case of operations of recognized national public interest or new construction of public facilities for collective use). Previously, new construction in ARU areas was being addmited as subject to the reduced VAT rate under the notion that it qualified as rehabilitation as urban revitalization.

In addition, we can anticipate doubts in borderline situations – is keeping the facade of a previous building with a new construction around it “building rehabilitation” or “new construction”?


2. For ongoing works, a transitional measure is proposed that safeguards that:

– the concept of “urban rehabilitation works” still applies to:

a. Urban operations or previous information requests submitted to the territoriality competent municipal council before the date of entry into force of the new law;

b. Urbanistic permits submitted to the territoriality competent municipal council, provided that submitted under a favorable prior information in force (PIP ou pedido de informação prévia).


This transitory measure is being understood as maintaining the 6% VAT rate for works in progress, even new construction, when, on the date the new law comes into force, the respective licensing or prior information request has already been filed (and, naturally, the other legal requirements for the reduced VAT rate on urban rehabilitation contracts are met).


The “More Housing” law  enters in force on 07-10-2023.


BELIM CASTILHO is a law firm specializing in tax law. The present notes are given for general information purposes.

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