Announcement of Tax Measures | “Building Portugal”
Although the draft law that the government will submit to Parliament is not yet known, the Council of Ministers communiqué of 25 September 2025 provides for the following list of measures:
- PERSONAL INCOME TAX
- Incentives for renting and selling residential property at a "moderate value", aimed mainly at the middle class throughout the country:
In the sphere of tenants | Increase in the limit of the deduction for rent to €900 in 2026 and €1,000 in 2027. This limit is currently set at €800.
Forlandlords , the autonomous personal income tax rate is to be reduced from 25 per cent to 10 per cent on moderate rents, which are considered to be rents of up to €2,300.
Sale of residential property |An exclusion from IRS taxation of capital gains resulting from the sale is provided for if the sale value is reinvested in rental property at a moderate value.
- VAT
- Stimulating the rental market and the construction of moderately priced housing.
Specifically, the reduced VAT rate - 6% - is to be applied to the construction of residential properties for sale at a moderate price. At the same time, the reduced VAT rate will apply to rentals at moderate rents.
There is also a reference to tax incentives for investments in the construction, rehabilitation or acquisition of properties for rent at moderate prices.
- IMT
- Although not included in the Council of Ministers communiqué, the government announced at a press conference an increase in the IMT rate applicable to the acquisition of property by non-resident taxpayers for tax purposes in Portugal.
This measure aims to discourage the purchase of property in Portugal by non-resident taxpayers with more purchasing power than the Portuguese population.
However, according to information provided by the government, this measure will not apply to Portuguese citizens.
In addition, other measures were approved focusing on urban planning and the licensing of housing construction works, as well as temporary accommodation for workers in the construction sector.
It is important to emphasise that only the general outlines of the tax measures approved by the Council of Ministers have been released, and it is necessary to await the Bill for a detailed analysis of the new regime.
In particular, the way in which the respective transitional provisions - on each of the aforementioned tax changes - will be drafted will be of particular importance, given the need to safeguard legal rights and expectations, as well as the principles of legal certainty and security.
Antas da Cunha ECIJA's Tax Law practice area is already anticipating a number of issues arising from the possible approval of the tax measures listed as presented, namely:
- Increased IMT on the acquisition of real estate by non-resident taxpayers | We may be facing a rule that violates European Union law by introducing unequal treatment between residents and non-residents in Portugal, hindering the free movement of people and goods. The Court of Justice of the European Union has already ruled on this issue in the past in relation to other discriminatory tax measures - for example, the IRS taxation of property gains made by non-residents.
- The reduction of VAT to 6% It will be important to define whether this reduction is made at the outset - with the start of construction and/or rental - or, rather, whether it will be a regularisation to be carried out by the taxpayer when they meet the conditions for this.
If the first situation is chosen - which is more favourable to developers and landlords - it will be necessary, for example, to provide for the consequences of the sale not taking place and/or the lease not being made at the value set as moderate, as well as the deadlines for regularisation and the respective penalties.
As this is a proposal for the years 2025-2029, the Transitional Law should also be clear on the application of this regime, namely whether it is sufficient to sign a promissory contract of sale by 2029 or whether sales must actually take place by the end of that year. In terms of rentals, it should also be clarified what the impact will be on the landlord if, despite all attempts, he is unable to rent the property (even within the range considered moderate).
Antas da Cunha Ecija's Tax Law team is available to provide personalised assistance and support, whether through a concrete analysis of the tax implications for the parties involved, or through possible regularisations with the Tax Authority.
