The cost of construction contracts has been one of the biggest bottlenecks for real estate developers and promoters. Aiming to boost supply, the new Housing Package (Decree-Law no. 97/2026) introduced a major measure: Item 2.42 of List I attached to the VAT Code, which allows applying the reduced rate (6%) to construction or rehabilitation contracts. However, dropping the tax from 23% to 6% on a project worth hundreds of thousands of euros is not automatic. The Tax Authority defined strict rules and red lines that, if crossed, force the developer to refund the tax with interest. If you have projects in the pipeline, here is the roadmap to secure this savings safely: 1. Purpose and Value Limits Your building or unit only qualifies for the 6% rate if it is allocated to one of two very specific purposes: Sale for Primary Residence (Habitação Própria e Permanente - HPP): The final sale price cannot exceed the maximum value of the 2nd IMT bracket, which in 2026 is fixed at €660,982. Residential Rental: The rent amount cannot exceed 2.5 times the Minimum Wage, which equates to a cap of €2,300 per month in 2026. (Note: If a single building contains both eligible residential apartments and commercial shops, the 6% rate only applies to the proportion of the contract corresponding to the eligible residential area. The remainder pays 23%.) 2. The Deadline Clock Building with 6% VAT requires placing the property on the market quickly. From the moment the "start of use" document (documento de início de utilização) is issued by the Municipal Council, the clock starts ticking: You have 24 months to execute the deed of sale or to bring the first lease agreement into force. In the case of rental, a "retention period" applies: the property must be effectively rented for at least 36 months (consecutive or interpolated) during the first 5 years. 3. Who is at Fault if Rules Fail?  This is the concern that has most alarmed real estate promoters: What if I build at 6% and, in the end, sell the house to someone who turns it into Local Accommodation or a holiday home? The law surgically separated responsibilities: Promoter's Fault: If you sell the property for more than €660,982, fail the 24-month deadline, or forget to explicitly state in the deed that the property was constructed under "Item 2.42.1". In these cases, the promoter must submit a replacement declaration and pay the State the VAT difference (from 6% to 23%), plus heavy compensatory interest. Buyer's Fault: If the promoter complies with price caps and inserts all terms correctly in the deed, but the buyer breaks the promise and does not move in within six months, the construction VAT is unaffected. The penalty falls exclusively on the buyer, who will face an IMT surcharge corresponding to 10% of the property value. The Window of Opportunity: To benefit from this regime, your project's licensing request (or prior communication) must be submitted to the Municipal Council between September 25, 2025, and December 31, 2029. Structuring VAT in a real estate project often dictates the viability of the entire business. Before launching your next construction contract and signing agreements with builders, speak with our team. We support your company through budget and accounting planning to safeguard your tax benefit.

From now on, if your company awards a construction contract and the contractor does not hold a valid contractor's license (alvará) or construction certificate issued by the IMPIC, the VAT reverse charge rule (IVA - Autoliquidação) no longer applies. This is the change with the highest immediate impact on daily operations and company cash flow, introduced by the newly approved Housing Package (Decree-Law no. 97/2026). Many companies became accustomed to billing repair, remodeling, or painting services with the mention "IVA - Autoliquidação," even without being formally registered construction firms. The Tax Authority put an end to this practice. For the reverse charge to occur — meaning the service provider bills without VAT and the client assumes tax assessment —, the builder MUST hold a public or private works contractor's license or certificate. If they do not, they are obliged to bill with standard VAT, forcing the entity awarding the work to pay the tax upfront. The second major update in this legislative package is excellent news for real estate promoters and residential leasing businesses. Until now, as entities carrying out exclusively tax-exempt operations (without the right to deduct VAT), these companies always received construction invoices with tax charged upfront by the builder. Under the new law, the reverse charge mechanism now also applies to these tax-exempt companies, but only in a very specific scenario: when contracts are intended for properties for sale (Primary Residence - HPP) or for residential lease framed under the new reduced rate, Item 2.42. In practice, this means the work must respect strict "moderate value" limits, such as charging rents that do not exceed €2,300 per month in 2026. If your residential leasing company awards one of these eligible contracts: The builder (holding the respective IMPIC license) issues the invoice without VAT, stating "IVA - Autoliquidação". Your company, despite not carrying out VAT-taxable activities, must submit a periodic VAT return by the end of the following month to declare and pay this self-assessed tax to the State. The major financial advantage is that this tax is self-assessed directly at the new reduced rate applicable under Item 2.42, drastically lowering the net cost of the construction work.  These rules formally enter into force on July 1, 2026, but can be applied with retroactive effect to invoices issued since January 1, 2026, provided there is mutual agreement between the contractor and the client. As these new rules intersect real estate price caps with formal licensing requirements, an improper reverse charge can be costly in fines and compensatory interest.

Although Portugal has finally initiated a downward trajectory for Corporate Income Tax (IRC) rates, the tax burden goes far beyond the percentage applied to profits. According to recent data from the Tax Competitiveness Observatory, managed by Deloitte, around 60% of Portuguese companies still classify our tax system as highly complex and a direct barrier to attracting investment. The Problem Isn't Just the Rate; It's the Complexity The diagnosis shared by managers is clear. Current frustration no longer stems exclusively from the amount of tax payable, but from "compliance costs". Constant legislative instability, the slow pace of tax justice, and the density of regulations demand an administrative effort disproportionate to Small and Medium-sized Enterprises (SMEs). Instead of focusing their energy on innovation, seeking new clients, or business expansion, entrepreneurs feel they are wasting valuable time and resources trying to interpret and comply with the bureaucratic demands of the Tax Authority. Simplify Management with Cooperate This study validates a frustration that many managers experience daily: the system is difficult to navigate alone. The tax machine will not simplify overnight, but the way your company deals with it can — and should — change radically. At Cooperate , we understand that bureaucracy steals your most valuable resource: time. We act as your tax shield and translator. We transform legislative confusion into financial predictability and ensure that your company meets all obligations without setbacks and with maximum tax efficiency. We take on the burden of complexity so that your sole focus is the profitable growth of your business. Speak with us today and bring peace of mind to your management.

W hen climate catastrophes, such as floods or storms, strike a busin ess, the entrepreneur's priority is clear: rebuild the facilities and resume invoicing as quickly as possible. To address this urgency, the Banco Português de Fomento (BPF) has launched the Reconstruction Support Line , introducing unprecedented financial agility. Fast Capital, Immediate Works Available through Commercial Banking, this funding line covers up to 100% of validated losses. Crucially, insurance payments are deducted subsequently, ensuring you do not have to wait for slow appraisal processes before starting reconstruction. The State’s major breakthrough accompanying this funding is the elimination of bureaucratic barriers. To accelerate the start of work, a simplified regime has been created that exempts companies from time-consuming administrative controls, such as standard municipal urban licensing. In practice, this means an end to the frustrating wait for bureaucracy to repair your infrastructure. Speed Requires Banking Preparation However, the exemption from municipal licensing does not negate the rigour required by banks and the BPF. To access this line with subsidised rates and a State guarantee, the documentation of damages, the accounting framework, and the structure of the credit application must be flawless. This is where a strategic financial partner makes the difference. At Cooperate , we understand that in times of crisis, your focus must be on operations and your team. We handle the technical negotiations for you. We help your company structure the validation of losses, prepare the financial dossier required by the Development Bank, and monitor the application swiftly and securely. Do not let a documentation failure delay your fresh start. Contact us today to secure the capital needed to rebuild your business.

During periods of market contraction or intensive investment, reporting a tax loss is a significant management challenge in itself. Historically, legislation placed further strain on cash flow during these critical times: companies reporting a loss faced an automatic 10-percentage-point penalty on Autonomous Taxation (AT) . This applied to daily operational overheads such as company vehicles, subsistence allowances, and representation expenses. The excellent news for the business community is that the 2026 fiscal framework has suspended this penalty. What does this mean for your cash flow? This tax relief ends the "double penalty" long dreaded by business owners. If your company has faced an atypical year—whether due to a drop in sales or a significant financial effort that resulted in an accounting loss—you will no longer be penalised with a disproportionate tax bill on your operating costs. The funds previously earmarked for this extra tax remain in your bank account. This provides vital financial oxygen , allowing you to focus your energy on recovery and the growth of your commercial activity. Safeguard Your Business with Cooperate While legislation provides relief, accounting precision is what truly protects your company. The correct classification of invoices and the rigorous assessment of expenses subject to Autonomous Taxation are essential to avoid complications with the Tax Authority. At Cooperate , we master the tax code to use it in your business's favour. We ensure your cost structure is optimised and that your company benefits from all legal exemptions, protecting your liquidity when you need it most. Contact us today to ensure intelligent, hassle-free tax management.

The uncertainties surrounding the execution of European funds have been resolved. The "Recuperar Portugal" Mission Structure recently submitted a strategic reprogramming of the Recovery and Resilience Plan (RRP/PRR) to the European Commission, guaranteeing 100% execution.