Hugo Leonardo writes an opinion article for Advocatus on the VAT challenges in the construction sector, advocating greater clarity and balance in the tax regimes applicable to the real estate industry. In the piece, entitled 'VAT in Construction: One Rate, Several Regimes – The Tax Challenges of ‘Building Portugal’', the VdA Senior Associate analyses the recent tax measures approved by Parliament and their impact on the construction sector.
According to Hugo Leonardo, “the recent package of tax incentives introduces VAT measures with the clear objective of reducing construction costs”, stressing that access to housing remains “at the centre of public debate”.
In the article, the lawyer explains that the new regime will allow the reduced VAT rate to apply to construction contracts intended for owner-occupied permanent housing or affordable rental schemes, provided certain requirements are met. Nevertheless, he warns that the measure will only cover urban development projects initiated after 25 September 2025, leaving a number of real estate projects outside its scope.
'This rigid timeline ultimately excludes several projects which, from an economic and social perspective, differ very little from those that will benefit from the regime', says Hugo Leonardo.
The VdA Senior Associate also highlights the planned changes to the VAT reverse charge mechanism applicable to construction services, arguing that the new solution “gives greater control to the developer, reinforcing the importance of being properly informed about the new rules”.
