VAT on Rehabilitation of a building in an ARU in Portugal: 6%, 13% or 23%?
6% applies to a works contract (empreitada) that rehabilitates a building inside an urban rehabilitation area (ARU), under verba 2.23. Outside an ARU the 23% standard rate applies unless another reduced-rate item fits.
- Rate
- 6% (reduced rate) on the mainland
- Legal basis
- Verba 2.23, Lista I, Código do IVA (CIVA), as worded by Lei n.º 56/2023
- Contract
- A works contract (empreitada) for an agreed global price
- Work
- Rehabilitation of an existing building: new buildings and rebuilding after demolition do not count
- Location
- A property inside an ARU delimited in law
- Proof
- The contractor must be able to show the ARU location, usually with a certificate from the municipality (câmara municipal)
- 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...
info.portaldasfinancas.gov.pt/pt/informacao_fiscal/inform... - Checked
- 2026-11-05
What decides the rate
- Goods and services that form part of the same global-price contract follow the 6% rate. Items bought or ordered outside the contract are taxed at 23%.
- Since the 2023 change an approved rehabilitation operation (ORU) is no longer needed, only the ARU location.
- Each municipality sets its ARU boundaries and decides whether works count as building rehabilitation.
- The ARU must be in force when the VAT falls due. AT guidance treats it as in force if its rehabilitation operation was approved or the ARU was delimited less than three years earlier.
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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