6% VAT on construction: the practical 2026 guide (DL 97/2026)
The 6% VAT on housing construction and rehabilitation is in force: Decree-Law n.º 97/2026, published on 20 May, set the rules — and the difference between applying 23% or 6% represents, on a single project, amounts that can reach tens of thousands of euros. This guide explains who qualifies, how the refund works for self-build, and the mistakes that forfeit the benefit.
Executive summary
- 6% rate on the construction and rehabilitation of housing at moderate prices — applicable from July 2026, with retroactive effect to January.
- Caps — sale up to €660,982 (permanent own home) or rent up to €2,300/month.
- Time window — works whose procedural initiative occurs between 25-09-2025 and 31-12-2029; VAT chargeable until 31-12-2032.
- Self-build — pays 23% and requests the refund of the difference after the use permit.
- Consequences of non-compliance — selling above the cap or leaving the home before the deadline forfeits the benefit and aggravates the IMT.
1. What the 6% VAT regime is
Decreto-Lei n.º 97/2026 approved a tax-relief package to boost housing supply: besides the reduced VAT on building contracts, it includes 10% IRS on rents, new exemptions and the Investment Contracts for Rental. The centrepiece is the 6% rate on construction or rehabilitation contracts for properties intended for sale as a permanent own home or for residential rental.
2. Who qualifies — the requirements
| Requirement | Rule |
|---|---|
| Destination: sale | Buyer’s permanent own home, with a sale price up to €660,982 (the 2nd IMT bracket limit) and the sale completed within 24 months of the use permit |
| Destination: rental | Monthly rent up to €2,300 — around 2.5 times the 2026 minimum wage |
| Time window | Procedural initiative of the works between 25 September 2025 and 31 December 2029 |
| VAT chargeability | From 1 January 2026 until 31 December 2032 |
Source: Decreto-Lei n.º 97/2026, of 20 May — Diário da República.
3. Direct sale at 6% or refund: two paths
For developers and eligible contracts, the reduced rate applies directly to the works’ invoicing. For those building their own home outside a business activity, the mechanism is the refund: you pay the invoices at 23% and, after the use permit, ask the Tax Authority for the difference back — the request must be made within 12 months, and the AT has 150 days to refund.
On both paths, documentary organisation is decisive: itemised invoices, linked to the permit, with the works identified. Disorganised project accounting compromises the exercise of the right and can lead to litigation.
4. What it is worth, in numbers
An illustrative example: a €250,000 building contract pays €57,500 of VAT at 23% — and €15,000 at 6%. That is a €42,500 difference, enough for the finishes, the energy efficiency or simply for not overrunning the budget. The bigger the works, the bigger the effect — as long as the property’s final value respects the cap.
€250,000 contract — VAT payable
23%
23%
€57,500
6%
€15,000
saving: €42,500
illustrative values, excluding ancillary costs
The difference between the two rates on a single project — drawn to scale.
“The 6% VAT is won at design stage: the budget that respects the cap is designed, not wished for.”
Tiago R. Correia
Architect
5. The mistakes that forfeit the benefit
Overrunning above the cap. A poorly chosen construction system makes the works more expensive and pushes the sale value beyond €660,982. Control starts in the detailed design and the bill of quantities — see our guide on how much it costs to build a house.
Missing the deadlines. The property must be sold or rented within 24 months of the use permit — commercial planning starts while still on site.
Leaving the home too early. Whoever buys with 6% VAT and stops using the property as their permanent own home is subject to a 10-point aggravation of the IMT.
Weak documentation. In the refund, non-itemised invoices or invoices detached from the permit reduce the amount returned.
Launching a project and want to keep it eligible? Start with the numbers: how much the design costs and how permitting works in 2026.
What already existed — and what comes next
The 2026 regime does not start from zero: rehabilitation in ARUs already benefited from a reduced rate on certain contracts, and that framework remains relevant for existing buildings in rehabilitation areas. The novelty is in new construction at moderate prices — and in what comes next: from 1 September 2026, the same DL 97/2026 creates the Investment Contracts for Rental (CIA), with 6% VAT, IMT exemption and eight years of IMI exemption for those who build to rent within the rules.
Frequently asked questions
My works started before September 2025 — do I qualify?
The regime covers works whose procedural initiative occurs from 25 September 2025. Earlier processes are, as a rule, outside — confirm your case’s specific framework.
Can I rent instead of selling?
Yes — the regime also applies to construction for residential rental, with a monthly rent up to €2,300.
What if the property ends up worth more than the cap?
The benefit presupposes respect for the limits; exceeding them forfeits the regime and implies regularisation. That is exactly why cost control at design stage is decisive.
Who validates whether my project is eligible?
Eligibility crosses architecture, permitting and taxation: the technical framework is ours; the tax component should be closed with your accountant.
Building within the 6% regime
We design the project and the budget to respect the eligibility limits while keeping the quality of the result. Send us the details of your plot or building.
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