According to the article published by Jornal Económico, real estate developers and builders are once again insisting on reducing VAT to 6% for construction and rehabilitation works. This claim comes after the Minister of Finance, Joaquim Miranda Sarmento, revealed during the discussion of the 2025 State Budget that it will not be possible to extend the reduced VAT rate to housing construction and rehabilitation projects, as the European tax directive does not allow it. In light of this scenario, the Government is now discussing in detail within the 2025 State Budget the approval of a legislative authorisation for the reduction of VAT on new housing construction works.
The VAT reduction is seen as one of the flagship measures of the Government of Luís Montenegro, being part of the ‘Construir Portugal’ programme, presented this year, which real estate market players are eagerly awaiting.
José Rui Meneses e Castro, co-CEO & Founder of Map Group, offers his perspective, stating that he believes this delay will always have some impact on the development of new projects. He also states that ‘It is a measure expected in the sector and would be important, particularly for housing in the middle-class segment, where the 23% VAT has a significant impact. I believe there are projects that were prepared to be developed with this measure in mind, which will now be delayed or reconsidered, as they might have been planned specifically for that segment.’
Furthermore, he argues that the impact of the VAT reduction to 6% will be felt in construction costs, as all materials are purchased with the VAT rate at 23% He reiterates his opinion, stating that ‘I think it will significantly reduce the number of people who will have the capacity to purchase a property and the selling price based on that cost.’
Read the full article at Jornal Económico.
