🏛️ Government proposes housing tax package with VAT and IRC adjustments

Oneliner

The Portuguese government is proposing a housing tax package that includes reducing VAT on construction from 23% to 6% and extending IRC tax benefits for rental income to individual entrepreneurs. Secretary of State Cláudia Reis Duarte announced these measures on February 4, 2026, aiming to stimulate affordable housing amid a supply shortage. However, researchers warn that these tax breaks may primarily benefit property owners without improving affordability for renters. The government is open to refining the proposals during parliamentary discussions.

Key points

• The government plans to reduce VAT on housing construction from 23% to 6% to stimulate affordable housing.
• A proposal to extend IRC tax benefits for rental income to individual entrepreneurs is under consideration.
• Concerns have been raised that tax breaks may not improve housing affordability and could increase owners' profits.
• The measures aim to redirect investment towards moderately priced homes amid a supply shortage.

Links

• Público: Descontos fiscais na habitação aumentam lucros dos proprietários sem baixar preços, dizem investigadores
• ECO: Governo admite clarificar regras do IVA da construção para salvaguardar construtores
• ECO: Governo abre a porta a alargar IRC reduzido das rendas a empresários individuais

Facts

• VAT on housing construction to be reduced from 23% to 6% for properties sold up to €648,000.
• IRC tax benefit extension for rental income may apply to individual entrepreneurs with organized accounting.
• Concerns raised about tax breaks benefiting owners without improving rental affordability.
• Up to 200,000 homes could be available for rent by 2027 if market responds positively.

Quotes

• We are completely willing to clarify, to improve and to expressly enshrine that a developer does not have to regularise the difference in VAT — Cláudia Reis Duarte
• We have no ideological prejudice, nor is this a closed pact. We will consider any proposals that can improve and strengthen these solutions — Cláudia Reis Duarte

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