Portugal cuts VAT on apartment repairs to 6% without municipal approval requirement

Builders have long paid 6% VAT on works in urban rehabilitation zones. However, the tax authority recently began demanding additional approval (ORU), threatening to impose 23% VAT retroactively. This resulted in taxpayers effectively paying tax twice.

Parliament has approved an amendment eliminating this confusion. Henceforth, it is sufficient that the property is located within a rehabilitation zone (ARU). The ruling applies retrospectively from 2008, allowing developers to recover millions of euros in overpaid tax.

This matters for investors: if you are considering purchasing an apartment in a Portuguese city centre, prices for renovated properties should fall. With tax uncertainty removed, prices are expected to decline.

Source: Portugal News