- Portugal’s government is proposing VAT reforms for residential property construction and rehabilitation.
- The reforms aim to address the housing crisis by increasing housing supply and controlling property prices.
- A government program introduces emergency measures for the housing sector, including a temporary regime to reduce tax costs on construction and rehabilitation.
- The regime applies nationwide, not limited to urban rehabilitation areas.
- Measures include reducing or eliminating urbanization, building, use, and occupation fees.
- A reduced VAT rate on construction and rehabilitation works is proposed, with a cap on the final value of eligible properties.
- The government mentions an “extension of deductibility” of VAT, indicating a potential shift in VAT treatment for real estate operations.
- Currently, VAT deduction is not allowed for residential property transactions, as they are exempt from VAT.
- Extending VAT deductibility would require structural changes in real estate taxation, potentially subjecting the first sale of new housing to VAT.
Source: internationaltaxreview.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
