Reduction of VAT to 6% on new construction and moderate rent leasing
Recently, the government approved a tax change in the real estate sector aimed at facilitating access to housing and stimulating the supply of more accessible properties.
This measure translates into a reduction of the VAT rate from 23% to 6% on new housing construction and projects intended for moderate rent leasing. To benefit from this tax change, the properties must have a construction value up to €648,022, and monthly rents cannot exceed €2,300.
The purpose of this measure is to increase the supply of accessible housing and encourage investment in residential properties. This change will impact the margins of builders and real estate investors.
Besides the VAT reduction, this new measure also includes additional tax benefits for landlords and tenants.
Landlords who enter into contracts with moderate rents will benefit from a reduced IRS rate of 10%, and tenants will be able to deduct up to €900 in 2026 and €1,000 in 2027 on their IRS based on the applicable contracts.
New Tax Changes from OCC for the Real Estate Sector
The Order of Certified Accountants (OCC) published, on September 16th, important new clarifications regarding the tax treatment of certain real estate transactions.
A key clarification by the OCC concerns the tax framework for the assignment of contractual positions in promise-to-purchase agreements. If this position is sold for a higher amount than initially paid, the difference may be considered a taxable capital gain under IRS, according to Article 10 of the IRS Code.
Another important aspect refers to advances paid by companies for the acquisition of urban land and the possibility that, if the deal does not materialize, these amounts may be considered tax-deductible losses for Corporate Income Tax (IRC), provided the legal requirements of Article 23 of the IRC Code are met.
These guidelines reinforce the need for careful tax planning in real estate transactions to ensure proper accounting and tax treatment.
Hong Kong, Liechtenstein, and Uruguay Removed from the List of Tax Havens
On September 5, 2025, Order No. 292/2025/1 was published in the Official Gazette, amending Order No. 150/2004 by revoking the inclusion of Hong Kong, Liechtenstein, and Uruguay in the national list of clearly more favorable tax regimes.
What has changed?
- These jurisdictions submitted formal requests for review, accompanied by favorable opinions from the Portuguese Tax and Customs Authority (AT), which concluded that they no longer meet the criteria that justified their inclusion on the list.
The Order takes effect the day after its publication (September 6, 2025) but produces effects from January 1, 2026. - The Order takes effect the day after its publication (September 6, 2025) but produces effects from January 1, 2026.
Expected impacts:
With this change, the increased penalties applied to transactions with entities resident in these jurisdictions will no longer apply, namely:
- Maximum withholding taxes (aggregated +35%) on dividends, interest, and royalties when these entities are the beneficiaries of such income;
- Increased IMI or IMT tax charges that were applied precisely because these entities were domiciled in “tax havens”
- Limitations on the deductibility of certain payments to entities in these jurisdictions, which will no longer apply to operations occurring on or after 2026.
What to do now?
Given the significance of these changes, companies and investors dealing with entities in Hong Kong, Liechtenstein, or Uruguay are advised to:
- Reassess any tax structures that rely on additional benefits from “favorable regimes”;
- Check whether acquired rights (contracts, future income) may benefit from the new situation;
- Adjust projections and consult their tax advisor to maximize legal advantages and avoid surprises.
