VAT on Building converted into flats in an ARU in Portugal: 6%, 13% or 23%?
6% applies only if the conversion is rehabilitation of the existing building, done under a works contract, in an ARU (verba 2.23). A new building or a rebuild after demolition is taxed at 23%.
- Rate
- 6% if the conditions are met, otherwise 23%
- Legal basis
- Verba 2.23, Lista I, Código do IVA (CIVA)
- Test
- Works that give an existing building adequate performance and safety, with new uses allowed
- Who decides
- The municipality (câmara municipal), not the tax office, decides whether works are building rehabilitation
- Documents
- Municipal papers showing both the ARU location and that the works are rehabilitation
- Official text (Lista I of the Código do IVA)
- info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigo...
- Sources
- info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigo...
info.portaldasfinancas.gov.pt/pt/informacao_fiscal/inform... - Checked
- 2026-11-05
What decides the rate
- A certificate that only says the plot is in an ARU is not enough to show the works are rehabilitation.
- A rehabilitation operation (ORU) is no longer required since the 2023 wording of verba 2.23.
Important
- This page is a general summary of public sources and not tax advice.
- Rates shown are for mainland Portugal. The rate depends on the facts of each job, so ask a certified accountant (contabilista certificado) or the Tax Authority (AT) before you invoice or pay.
More: VAT guide
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