In the latest proposal for the 2025 State Budget (OE2025), the Portuguese government has introduced a significant legislative authorization aimed at reducing the Value Added Tax (VAT) for home construction and rehabilitation from 23% to 6%. This measure is part of the "Construir Portugal" initiative and aims to enhance housing affordability while stimulating the construction sector.
The government seeks to ensure that this reduced VAT rate is applicable only to housing projects that meet specific criteria, thereby aligning with social housing policies. The initiative is expected to make a considerable impact on the housing market by potentially lowering prices for new homes, as emphasized by Minister Miguel Pinto Luz. The implementation of this reduction could take up to a year, with the government focusing on ensuring that the benefits of lower VAT rates are passed on to consumers.
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