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The 6% VAT Advantage: How New Construction Reforms are Saving Buyers Thousands in 2026
5 min read
•Published February 8, 2026The 6% VAT Advantage: How New Construction Reforms are Saving Buyers Thousands in 2026
Building or renovating in Portugal? You might be eligible for a massive tax break.
The Standard vs. Reduced Rate
The standard VAT (IVA) in Portugal is 23%. However, specific "Urban Rehabilitation" projects qualify for the reduced rate of 6%.
Eligibility in 2026
- Location: Property must be in an Urban Rehabilitation Area (ARU).
- Scope: The renovation must preserve the character of the building.
- New Construction: Some affordable housing initiatives now also qualify for reduced VAT.
The Impact
On a €300,000 construction budget, the difference between 23% and 6% VAT is €51,000. Always consult an architect familiar with ARU zones before buying.