News
Is the reduction of VAT on construction really a solution or just an illusion?
Did you know that the long-awaited VAT reduction on construction to 6% has fallen through again? Despite being a measure that has long been called for as essential to combating the housing crisis, its implementation continues to come up against legislative obstacles and a lack of clear criteria. But why has Portugal still not been able to move forward with this solution, when several European countries have already implemented similar measures to encourage the construction and rehabilitation of housing?
In an opinion piece, Madalena Azeredo Perdigão, a partner in CCA's Real Estate practice, analyses how the government's proposal to lower VAT on construction was rejected in the 2025 State Budget Bill, as it did not meet the criteria required by European Directive (EU) 2022/542. This decision represents a missed opportunity to boost the construction sector and increase the supply of affordable housing. The author also points out that countries such as Belgium, France, Hungary, Cyprus and Czechia already apply reduced rates to boost the sector, while the United Kingdom exempts residential construction from VAT.
‘The other measures implemented by successive governments will be of little use if they are not reconciled with cutting one of the major costs of construction, such as VAT,’ says the lawyer.
- Público