Portugal cuts construction VAT to 6% and landlord tax to 10% under new real‑estate law

Decree‑Law 97/2026, approved on 20 May 2024, overhauls Portugal’s housing‑tax regime. It lowers the value‑added tax on new construction and renovation from 23 % to 6 %, taxes rental income of landlords at a flat 10 % IRS rate, and grants a full exemption on capital‑gains when the proceeds are reinvested in rental housing. The law also creates two new schemes – Contracts of Investment for Rental (CIA) for large investors and the Simplified Accessible Rental Regime (RSAA) for individual landlords – and will remain in force until 31 December 2029.

The head of the Portuguese Order of Notaries warned that the partial VAT refund allowed for self‑construction may encourage taxpayers to undervalue land prices and commit fraud, putting additional pressure on tax authorities to verify declarations.