“We believe that by the first quarter of next year, we will have the 6% VAT, for projects submitted after that date, finalized, but it will also depend heavily on this house, on the discussion and approval process,” stated Miguel Pinto Luz, who is being heard in parliament as part of the specialized discussion of the 2026 State Budget (OE2026).

The official explained that joint work is being done with the Ministry of Finance in preparing the proposal that must be sent to parliament.

The Minister of Finance, Joaquim Miranda Sarmento, has also said that he expects the “great effect” of reducing the VAT on construction from 23% to 6% will only emerge from 2027 onwards, because the impact is not immediate.

In the Budget, Finance and Public Administration Committee (COFAP), Joaquim Miranda Sarmento explained that the 6% VAT rate will apply "to new projects submitted to the municipalities," which will happen "when the law comes into effect," scheduled for 2026. However, he stressed that the impact will not be immediate.

"The major effect will begin to be felt in 2027, due to the delay that exists between the submission of projects, their approval, and the start of construction," he said.

The Prime Minister announced on September 25 that the Government will propose to Parliament a reduction in the VAT rate to 6% for the construction of houses for sale up to €648,000 or, in the case of houses intended for rent, with rents up to €2,300.

This tax regime will be in effect until 2029, the head of government said at the time.

Luís Montenegro admitted that the reduced VAT for the construction of houses for rent up to €2,300 may be a value that "sounds a bit high," but argued that it is "a maximum ceiling" and that it aims to cover the construction of houses for families in areas of greatest pressure, such as the Lisbon and Porto Metropolitan Areas.

The measure is part of the "Building Portugal - Renting and Simplification" package, designed to strengthen the supply of affordable housing, integrating measures in line with the Recovery and Resilience Plan (PRR).

The proposed law to reduce VAT has not yet been formally submitted to parliament and is not part of the 2026 State Budget initiative.