However, this reduction is restricted to the purchase of owner-occupied homes up to €684,000 and rentals up to €2,300 per month, leaving many situations uncovered.

Cláudia Reis Duarte, Secretary of State for Fiscal Affairs, says the measure is restrictive due to European Commission regulations.

She clarified at the seminar's opening that the directive does not permit a blanket 6% VAT rate for all housing construction. The event, 'Housing: New Investment Incentives' was organised by Imojuris in collaboration with VdA Sociedade de Advogados.

A law published on 6 March gives the government 180 days to approve tax relief measures. Under this law, VAT may be reduced from 23% to 6% specifically for the construction of homes intended for sale or rent as permanent housing at “moderate prices” (up to €2,300 rent or €660,982 sale), with the goal of increasing housing supply.

Other measures lower the IRS from 25% to 10% for rentals up to €2,300 per month. The decree exempts capital gains tax if sales profits are reinvested in rental property, raises the deduction limit to €1,000 per month, and imposes a 7.5% transfer tax on non-residents buying homes.

Cláudia Reis Duarte did not elaborate on the VAT issue but highlighted the decree as an example of effective collaboration among stakeholders in public housing policy.

She explained the central aim: reduce housing costs and boost supply, especially for middle-class families facing financial strain. She noted that this comprehensive fiscal package supports families, businesses, and investors.

She said, “We want to help families renting or buying, real estate investors, and municipalities needing housing solutions.”

She added that the new law encourages owners to put vacant properties on the rental market and stressed the importance of providing incentives to achieve this.